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Zillow Chief Economist Stan Humphries on the increase in investors buying homes and converting them into rental properties.
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Foreclosures.
Are up again home prices down again but guess what there's actually some good things in the housing market that.
Most of you out there are not hearing about are talking about.
Stan Humphries is.
The bright spot I guess -- it would invest in people are just buying to live in places are -- to invest in house and that's good news.
That's actually right yeah I mean we spent so much time focusing on declining home values nationally a lot of markets and actually the opportunity it's opened up because of declining home values is that.
We have a lot of of people who -- renting more than ever now and investors are stepping in to basically arbitrage homes.
From the purchase -- over the rental side they're stepping -- -- distressed assets very cheaply and in agreement rental housing which the market really needs right now.
One would argue that may be the flipping mentality is what got people into trouble in the first place they were buying properties that they weren't even going to live in but.
You say that this is a very important development and and you know they're an op -- up there recently where where people are talking about saying you know give some incentive.
For that kind of investment do we need to take it that far.
Yet and it's important to differentiate the kind invest in -- occurring here from that that you described if flipping which happen it really did during the housing run up.
That was a quite a different kind of animal of investing.
Looking for real estate appreciation is really the upside there.
This is really traditional real estate investing which is not really focusing on the appreciation potential for real estate.
But rather focusing on the cash flow positive nature of -- property that you can buy for certain price and you can rent it out in clear -- your view mortgage payment on -- and that's is.
Really -- real estate investing this happened for for you know decades and that's what we're seeing and that's been that's very successful at these low prices.
Combined with rental supply which is pretty tight we're expecting to see rental rates rise -- -- 5% this year.
And basically the foreclosure epidemic as bad as it is is converting a lot of households from owners and directors of supplies -- Stand today we got the extraordinary.
News I never thought I'd -- -- -- thirty years some thirty year fixed mortgages are coming in.
Under 4% -- three point 9% now they're all kinds of provides those on that stable but still the lower -- interest rates are you still don't see movement.
In the housing industry is is is it and -- an impossible dream to believe that.
Even lower interest rates will move the housing industry.
Yeah I think if we ever -- evidence that we are not an -- driven environment.
Then it's the current market right now where it's really you know sort of low interest rates we have seen for forty years.
Prices that have been reset back to.
Back to 2003 levels and those combined to create affordability which is off the charts but yet still we're about to wrap up -- spring and summer selling season for 2011.
And we have a lot -- hopes to show forth in those fundamentals would suggest it's really a crisis of confidence right now.
Being fueled by high unemployment negative equity rates which -- in 20% range.
22 million households across America are doubled up of one another because -- -- of jobs out there to get him to move out into their own housing units.
But the but the big question is should people if they've got a chunk of change would be buying a foreclosed property fixing it up and renting -- -- can they really make some good money at this point.
Yeah yet -- -- definitely an and a lot of these markets right now you know basically September about 19% of sales were going to investors so.
Yes so obvious markets that makes a lot of sense because -- supplies tight and you can get.
Distressed assets -- cheaply and it's encouraging to see because typically investors are.
That the vanguard for the housing recovery there they're part of a big segment to put a floor under prices because they have a very long term horizons.
They're gonna buy that home and -- and holder for fifteen years so they're less concerned if prices go down for another year or so.
-- good to see -- thank you so much for the bright spot which we don't often see in housing we appreciate.
