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Housing Market on the Road to Recovery?

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    Zillow Chief Economist Stan Humphries on the outlook for the housing market.

  • Duration 4:35
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-- here's what some gears here guys and up on some good news.

About housing -- this shocking as you can find.

For the first time since -- summer 2010.

Home prices have climbed it.

Over the level of a year ago now could this finally mean that the housing market is on its way to recovery not -- heard that before.

We turn to Stan Humphries chief economist was zillow for some insight.

So tell us what you think first of all.

-- Home prices came out today and they've rose 2.3 percent for the month before but they're up for the first time since over a year ago since September 2010 what do you think of those numbers -- That's right -- the case Shiller numbers are finally confirming what other indices are -- and showing for awhile which is that we think we have hit a bottom in terms of home prices nationally.

On the zillow home value index we believe -- bottom that actually late 2011 early part of 2000 well in fact we're up one point 2% year over year when you exclude foreclosures.

Yeah I think you've got throughout a month or so -- saying -- the turnaround is here but.

I word you're a little early up there you -- guys it's a little too optimistic on this.

Well -- that is the first time if that's true because generally moved we've been pretty bearish about where the housing market has been during the housing recession and we've been.

-- on the bearish side in terms of -- but we we think that.

We've waited long enough and we went on the bottom once and we we think we're right right now we -- all sites and be pointing to.

Home sales being up you know every month consistently anywhere from five to 12% from where there were last year we think comeback as is now showing us slow albeit consistent -- trend.

They were starting to see negative equity slowly recede as well so all the metrics seem to -- warning.

In a pretty good direction.

I love that -- -- -- negative.

Equity now I'm just wondering.

I've been here for two years at the supply of vacant homes -- keeping those prices down.

But now I read that they're actually shortages.

In some areas tells thought that.

That's right in in areas like Phoenix and Miami were definitely seeing -- -- inventory shortages where.

Overall inventory for sell homes -- those markets is down about 30% from where it was last year.

And it's particularly acute shortages and in the lower priced here comes if you look at the bottom third of -- by home value.

And in Phoenix for example for sale homes and that tear down almost more than 60% -- last year some real.

Acute inventory shortages which we think are being exacerbated by all the negative equity out there is some of these people might wanna sell their homes to some these new buyers but they can't because they're underwater.

Now let's talk about the underwater things are still fifteen million homes underwater one trillium above one trillion dollars -- more that they -- the banks in the homes are worth.

But the numbers down 400000.

In the most recent quarter from the quarter before according a report -- a day or two ago.

Now that is largely because Morgan -- that foreclosure process but what do you think about the -- home problems that still stopping a full rebound from common.

Did did the negative equity situation is definitely gonna cast a long shadow -- the housing market.

In our expectation is that because in negative equity in the fact that compare that with you know me you know I guess when you -- negative equity of 30% of outstanding mortgages -- underwater.

With unemployment above 8% -- -- a lot of foreclosures in the coming years and we think that's gonna keep in the next 24 years after his -- bottom.

Really gonna keep a firm little appreciation we're looking at something more than one to 3% range depending on the market -- -- the next you're looking at just over 1% appreciation.

And then after that we think we'll develop -- appreciation rates but yet it's going to be a cloudy markets because a negative equity for the near term.

I -- one last thing that if we've got this.

Inventory going down and we've got underwater homes is going down.

The Fed still feels like the Federal Housing Administration Fannie and Freddie ought to get into the business of renting out.

Vacant properties are really bad idea for the government didn't and rental home market isn't.

Well yeah I've I think we you have -- need to look at that government intervention and direct intervention in the rental market.

You need to look at pretty carefully because generally the rental market overall has been one of the silver -- has been real successful part of the over housing market.

In the past year and have two years where private investors have been moving in pretty briskly.

To take advantage of these -- homes in the foreclosure -- converting them into rental.

Homes where we really need rentals because rental demand is going through the roof because -- -- foreclosures these people are being foreclosed on have to live somewhere.

So the private market is already really stepping into to serve that space we do -- -- be careful about the government then.

Trying to usurp the private sector is doing and actually -- the homes out themselves because these people in the making business plans with the expectation that.

-- -- they're gonna be able to service the rental demand themselves so we aren't careful about direct intervention by the government there -- right message have been cranky Bernanke don't do it -- of the market thank you very much Stan Humphries.

Thank you.

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