Zillow economist: Crisis of confidence among home buyers coming to an end
The drop in home values and historically low interest rates have made home ownership more affordable than it has been in 40 years. But homeowners who could be buying are opting to sit on the sidelines because of concerns about the shaky job market and the continued drop in home values.
The good news is that the crisis of confidence may be coming to an end, said Humphries, delivering the kind of forecast that can make a banker’s heart flutter.
Humphries was speaking during lunch atD.A. Davidson’s 14th Annual Financial Services Conference at Seattle’s Bell Harbor Conference Center. The two-day event — which has drawn in about 270 bankers, analysts and institutional investors — ends Thursday.
As the audience dined on roast chicken, wild rice and asparagus, Humphries gave an overview of the housing market.
He said that in 2012, housing values should bottom out. Nationally, home values have declined 25 percent from their peak in 2007, before the Great Recession. They fell more in greater Seattle, where home values have dropped 34 percent since the 2007 peak.
There is still a lot of stress on the market. No surprise there in a room full of bankers, many of whom are carrying millions in nonperforming loans on their tally sheets.
And there may be more pain to come. Nationally, 28 percent of homeowners carrying mortgages owed more than their homes were worth as of the third quarter of 2011. In Seattle, it was 36 percent. (It's worth noting that a third of homeowners don't carry mortgages).
But the decline of home values has slowed, and Humphries said it should hit bottom this year. And there are eager buyers, especially those who are investors, those buying a second home and retirees. There is a sign that investors are snapping up bargains among foreclosed homes, with one out of five home sales going to investors. One in three home sales are “cash buys,” typically from retirees who are selling one home and buying another in a place where the are retiring.