Real estate attorneys are being sued in court over a new data-driven analysis that shows a clear correlation between a property’s price and the risk of a home’s death.
In a landmark ruling this week, a federal appeals court has ordered a halt to the analysis, arguing that it violated privacy laws.
The analysis, by real estate firm Kroll Associates, used a software program to determine whether a home is worth a certain amount based on data from a real estate broker.
It then calculated how much it would cost to buy it at a price lower than what it’s currently selling for.
That number is often used to determine if a home should be sold for less than its market value.
The analysis showed that the average price of a new home in California dropped nearly 40% after the data was analyzed, according to the ruling.
According to the court, Kroll’s analysis had the potential to reveal how much real estate prices are driven by demand, or the desire of potential buyers to live in a particular area, and how much they could afford to pay for a particular home.
The decision could also help explain why California’s economy has continued to shrink even though property values are up in many cities and towns.
“This data analysis, and its subsequent publication in the public domain, is likely to further erode trust in the housing market and to discourage a number of people from buying homes, resulting in a downward spiral in home prices,” the ruling states.
The ruling was based on a lawsuit filed by Kroll and two other California-based real estate companies in 2015, one of which was bought by the same firm.
The real estate analysis used a tool called CoreLogic’s Real Estate Risk Calculator, which allows users to calculate how much the average home could cost based on what the data indicated.
The court noted that real estate experts had been saying for years that homes with higher values were likely to be more desirable than homes with lower values.
In their lawsuit, the California-area firms argued that their analysis was not meant to suggest that buyers should sell their homes to avoid paying for them.
Rather, it suggested that sellers might be more likely to move into homes with high value if they can find an affordable home that can be rented.
While the ruling is not a landmark decision, the decision could help explain how California’s economic situation has continued, even though the state has experienced a boom in housing.
Read more: California Real Estate: A guide to the latest listingsThe ruling comes at a time when California’s real estate market is still struggling to recover from the devastating impact of Superstorm Sandy, which caused widespread flooding and shut down most of the state.
At the time of the lawsuit, Kroller said it believed that it would be at least a year before the company would be able to get its analysis to the market again.
But as of Wednesday, the data analysis has been temporarily halted.
The firm said in a statement that it is working to determine how to move forward, but said that it will take some time to fully implement its analysis.
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