According to CBS News, one of the nine key trends in U.S. real estate for 2017 is that costs of new construction are expected to hit an all-time high. First-time homebuyers who strongly favored new construction nearly 2-1 over existing homes (Trulia, 2014) are now considering used homes as an alternative, setting up potentially ideal opportunities for banks to release some of their shadow inventory on the market.
Shadow inventory consists of homes that are held off the market by banks because they are in some stage of foreclosure, or the market is too saturated, or sometimes they are simply held to appreciate in value. For the latter two cases, banks are now facing favorable circumstances for profiting on these shadow properties in the face of higher construction costs.
There are two major factors recently affecting the uptick in prices of new construction:
1. Labor shortage. The current shortage of skilled workers is forcing builders to offer higher wages. A survey by the National Association of Home Builders (NAHB) in 2016 found that 56% of construction companies reported being short-handed. This was up from just 21% in 2012. These costs are then directly reflected by the median home price over roughly the same timeframe, which skyrocketed from $151,000 to $196,500, far faster than the rate of inflation.
Making up an estimated 40% the labor force, many foreign-born workers returned to their countries after the recession of 2009. Many of those that remain face uncertainty and even threatened deportation under the current administration, that can only work to further exacerbate the shortage and drive prices higher.
2. Lumber tariffs. Home construction requires a massive amount of wood. And much of this wood comes from our neighbors up north. A recent tariff of up to 24% on Canadian lumber translates to the equivalent of $1236 increase for the average single-family home, according to the NAHB.
The largest populations of homebuyers on the market now are Baby Boomers and the older segment of Millennials looking to put down roots. All of these rising expenses culminate in these groups exploring all options, including fixer-uppers. Banks holding shadow inventory that can be released may just end up the being the biggest de facto beneficiaries of this climate.
The MIMICS Real Estate module helps you organize and maintain all aspects of real estate. Contact us for a free demonstration.
“Josh, you have a phone call,” my manager reported.
My heart immediately sank. I had been receiving threatening phone calls for over a week, both at home and at work, and I knew this was another one. The person on the other end wanted money. Or else. He specified a dollar amount, a drop location and a time, and then threatened to kill me if it wasn’t there. He was my best friend.
Pause. Let’s back it up just a bit. Add context. This was circa 1992. I was a high school junior, washing dishes at Ponderosa Steak House a few nights a week to pay off my trusty K Car. I didn’t exactly have much game, let alone any money. But I also didn’t have any enemies that I knew of. That’s why somehow I knew it was my old friend “Jake.”
Jake and I had been best friends a couple years before, spending a couple of inseparable summers together, forming a 2-piece skateboard “gang,” writing really dope gangster raps, and being generally harmless little punks.
Then his parents got divorced around the time we started high school. Like an after-school special, he promptly ditched school in favor of cruising Main Street and smoking weed with his mustachioed older cousin. Needless to say, the skateboard gang disbanded, and Jake and I walked our separate paths.
So a couple years later when those calls came, that car parked across the street, the doorbell rang late at night, I somehow knew it was the two of them. Motive? I was an easy target. I was terrified, and fear is a great motivator. I was sure to pay.
Yes, I am using this story to parallel a ransomware attack. Work with me. There are some obvious physical differences: In this case, I knew my attackers, I had police resources, and, finally, nothing physical had been taken from me. They were not demanding money for me to get my files back, but rather to NOT KILL ME. Different, possibly worse, but nothing tangible had been stripped from me that I had to pay to recover.
However, the emotional similarities are undeniable. Namely, that awful feeling that you no longer control your own destiny. Someone else has life-hacked you and is now pulling the strings. For months after, the sound of the phone ringing caused my fists to clench. Co-workers walked me out to my car after closing. These things make you feel small, vulnerable and exposed. And they are all exacerbated by the feeling of having no good options, and nowhere to really turn for help. And even if you pay them, you have no guarantees that they will leave you alone or even return your files. It is a helpless feeling.
But there is one glaring difference that I would like to draw your attention to. And that is that my situation could not have been prevented. Like any victim, at some point you ask yourself what could I have done differently? You second-guess yourself, and wonder what if I had done this or that. But in my case, there is nothing I could have done differently; no forethought or amount of planning could have stopped it.
With ransomware, however, there are measures you can take to protect yourself. FOLLOW THIS GUIDE for starters. Do not bury your head in the sand and pretend it can’t happen to you. Better to prepare the castle for a siege, because you’d better believe those bad guys are out there somewhere, looking for a way in. With some good disaster planning and a little luck, hopefully you’ll never meet them.
Oh, the Jake fiasco? It ended in small-town theatrics. The police set up a sting, it was summarily bumbled, and the bad guys got away. But it had the desired effect; fear is a great motivator. They never bothered me again.
Read more about MIMICS Disaster Recovery options.
As ransomware attacks continue to grow in size and breadth, and the type and scope of victims grow right along with them, your best defense in this fight you didn’t ask for is education and preparation.
Because if you are hit with an attack, it is already too late. Too late to back up, too late to gameplan. You will then be left with one of two very poor choices: either don’t pay the ransom and never recover your data, or pay the ransom and MAYBE recover your data. As any good bully will tell you, once they know you’ll pay, the chances are that you’ll be willing to pay more.
So your best defense, it turns out, is a good defense. Stack the deck in your favor by following these tips:
1. Don’t Hesitate, Update. Yes, it is annoying when your computer tells you it has to re-start to install updates. It’s inconvenient and no fun. But you know what’s less fun? Ransomware. Having some or all of your files held hostage and destroyed if you don’t come up with some serious bitcoin.
2. Now Let’s See You Back it Up. At least once a week, I’m halfway home on the train, when I suddenly utter a muffled curse to no one in particular. Because I just remembered that I forgot to commit. We have a share drive at work, and invariably I can’t get through a week without committing my files to it every day. DON’T BE THIS GUY. Back up your data to a remote hard drive, offline. Just take the 5 minutes, build it into your routine. Hopefully you never need that security blanket, but it is priceless to have.
3. Curiosity Killed the Files. The number one delivery vehicle for ransomware by far is phishing emails. If it looks suspicious, report it. Or at least ignore it. Especially anything with an attachment or link, from your personal or work email, even if it LOOKS like it is from a trusted sender, don’t do it. Better safe than sorry.
4. Think Proactively. Sounds simple enough, but let’s be honest. There are a lot of moving parts to any business, a lot of communication and collaboration, and sometimes things slip through the cracks. This needs to be a top priority. Take the time to get together and make sure you have a comprehensive strategy and either in place or ready to be implemented as soon as possible.
Ransomware is a very real threat, with some potentially crippling results. The best way to stay ahead of the criminals is to stay vigilant, and protect yourself in all ways you can. Start with these four. MIMICS offers full Disaster Recovery services, and will work with you closely to help you form your best line of defense.
“My message for companies that think they haven’t been attacked is: You’re not looking hard enough.”—James Snook
“True cybersecurity is preparing for what’s next, not what was last.”—Neil Rerup
Ransomware is a type of cyberattack where the attacker encrypts the victims’ files and holds them hostage until a demanded sum of money is paid. The WannaCry attack in May of 2017 that affected nearly a quarter-million computers in 150 countries brought it to the world’s attention, but it has been a steadily growing problem for years.
The Forbes Annual Threat Report revealed that ransomware attacks grew from 4 million in 2015 to 638 million in 2016. Ransomware is now a billion-dollar industry that keeps evolving; the number of ransomware variants grew 30x last year alone. Attacks have also become more targeted, and are focusing more on businesses than individuals. Most companies now list it as a major concern, and rightfully so.
There are three very good reasons for this meteoric rise of ransomware:
1. It works. In a survey conducted with IT pros from over 300 organizations, nearly 100% reported they were actively backing up their data. Of those who had not yet experienced a ransomware attack, 81% said they were confident they would be able to recover any data attackers encrypted from backup, without paying the ransom. However, of the same pool of IT pros who had actually experienced a ransomware attack, only 42% could successfully recover all their data from backup. To put it differently, attacks against “prepared” victims yielded a 58% success rate.
2. It pays. Two years ago, the average attack yielded a $294 payout. The average this year is $1,077. Not only that, but according to Norton, 34% of victims globally end up paying the ransoms. However, American victims are paying at a rate of 64%.
3. It is accessible. As it has become increasingly lucrative, it has become increasingly popular. With a growing market of would-be attackers, there are entities on the dark web catering to them with Ransomware as a Service (RaaS) products that require little to no hacking knowledge to operate.
This has all led to a self-perpetuating cycle. With more victims willing to pay, these cyber-criminals are taking advantage of a fertile market, and getting bolder in their demands.
An IBM Security study from December 2016 found that over half of the businesses they surveyed said they had already paid over $10,000 in ransom while 20 percent said they’d paid over $40,000.
Read more about MIMICS Disaster Recovery services.
MIMICS was recently spotlighted in the Portland Business Journal, as a stalwart in the ever-growing local tech scene. The article features excerpts from an interview with President and CEO Lincoln Wildgrube, in which he talks about the past, present and future of the company, including a preview of MIMICS’ upcoming cloud-based initiative, QTZL.
“QTZL stands as our greatest challenge and opportunity,” Wildgrube said. Slated for launch early next year, QTZL will combine the reliability of MIMICS software with the versatility of the cloud. Its first offering will be an issuance module with a built-in CRM system. Reservations are now being accepted.
You can read the full article HERE.
The Portland Business Journal offers a weekly print edition, as well as digital subscriptions that include daily newsletters. It is one of the American City Business Journals, which has local editions in 40 U.S. cities.