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Zillow chief economist Stan Humphries weighs in on the state of the housing market.
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After months of mixed data on the housing market a new report from zillow says it has finally bottomed out with home values posting.
Their first annual increase in nearly five years.
Joining us now first on.
Fox Business is Stan Humphries zillow chief economist and yes it's -- have thanks much for joining us.
We appreciate your time where it's about this report -- -- there's some really strong signs in here.
Medium home values -- have risen more consecutive months but now we're seeing some big moves month over month right.
That's exactly right -- and quarterly I mean basically home values rose about a more than 2% between the first and second quarters of this year.
Which is actually the strongest quarterly gains we've seen since late 2005 before the before the housing recession set in and then June was our first annual increase in home -- since as you said 2007 so it was a very strong quarter for housing from values.
Yeah and we want -- put -- the map because of of course as always with real estate all real estate is local and there are places that it still following illustrate the map right here some in the second quarter year over year.
Places where we're really seeing home prices -- are some of the hardest hit right like Phoenix Fort Myers up almost 8% units up 12%.
Talk to us about the strength.
Yeah I mean I think what was impressive -- he knows that it did before chart of the metro elevenths thinking actually what was impressive about the second quarter numbers for the fact that was the fact that.
It it was a strong quarter in the midst of some and not in -- headwinds in terms of flagging job growth numbers.
And is continuing worries about sovereign debt issues of the fact that the housing market was able to power through.
Those issues I think does indicate that we've got some organic fundamental strength to the housing market.
In terms of actual individual markets yet we've got markets like Phoenix and Miami that are really hard hit markets -- -- -- there are down now more than 50% from their peak.
And they're the ones are actually we're seeing just really distinct -- V shaped recoveries.
Very high -- -- appreciation Miami's up 6% Phoenix is up 12% from year ago levels.
Yet -- I have to -- I'm I'm a bit skeptical.
Calling a bottom here and the main reason why is foreclosures there are so many pent up foreclosures in so many markets in this country.
You've got the government restructuring mortgages keeping them in their homes longer than -- probably should be delaying these inevitable foreclosures creating these.
Almost mini bubbles where inventory of homes is so low even he's standing -- report site.
Lower inventory supplies part of the reason why prices have come up.
So don't you have to factor in the foreclosure crisis and say well we don't exactly have a a pure.
Playing field yet.
Yeah I think fit in terms of foreclosures I think that that did the idea of the tsunami of foreclosures has been a bogey man it's been.
Lurking out there for -- -- years that housing recession where we keep thinking -- -- on the corner.
Of this massive cascade of foreclosure and in the marketplace.
And most recently we thought that since the robo signing controversy in late 2010.
Really reduce the pace of foreclosures we thought well.
Once once we start the pace for closures and -- street we we settle all these robo signing issues.
Will will start to see this cascade of foreclosures again but you know that the settlement was it was it was signed in in February it was court authorized an April.
Insist that time we've seen a modest uptick in in foreclosure starts but it's not a citizen -- and I think at this point we have enough experience.
But the foreclosure flow and -- marketplace to say that more likely what's gonna happen is we're gonna see a slow bleed -- foreclosures.
Into the marketplace over the next two to four years and then why don't you cannot -- limited supply of available homes.
When I think that I think that's a good point I think when you when you look at markets like Phoenix Miami and you ask yourself.
Why -- they seeing bubble level home appreciation of six to 12% I think -- the picture is one of really supply constraints.
Which that supplies being constrained.
Largely for for really two reasons.
One B got a lot of negative equities a lot of people who might want to sell their homes because demand is picked up can't because -- underwater.
And in the other issues is -- troll market dynamics where of course every buyer wants to -- the.
Bottom but yeah seller wants to sell the bottom I don't wanna let go without looking ahead at your forecast is people want to know about the future and I you say that she went five or 67 -- the 156 markets that you guys cover.
Are expected to see an increase over the next year some of the biggest places are you next you think prices are gonna go up 10% over the next year in Phoenix Miami up 6%.
Where else do you see big increases are you forecasting for the next year give -- couple markets.
Well I mean that he you know -- and it's the biggest ones -- -- Phoenix Miami were expecting as stronger home price appreciation lower than we're seeing right now but stronger than than you would expect those markets and again I think we're gonna supply issues.
I think that is that we are gonna see a temporary price appreciation those -- markets once once the prices have gotten off the trough a little bit.
I think you are gonna see some supply in the marketplace people get out in negative equity in -- put their -- -- for sale and we'll see a cooling.
The Miami and Phoenix markets but for the next year we think they're gonna pretty hot.
Other markets are going to be hot you know DC is is been along a bottom and -- -- been a pretty good market now for past two years.
But other markets like Orlando in the Bay Area in LA for that matter.
LA's only modestly up just under 1%.
But they San Jose and San Francisco markets we expect to be a quite quite a bit next year and actually we think home buyers who rise about 1% of the next year which is.
But -- -- following if you think that is our long -- real state returns about two and half to 5% -- 1% -- not historically normal but it's better than falling.
That's right all right we'll see your forecasts -- right thanks for coming on we appreciate it thanks Dan thanks very.
