Stan Humphries, Chief Economist at Zillow, on the Buyers and Sellers Markets in Massachusetts

Good morning and welcome back to the financial exchanged unite Barry Armstrong with you today we're joined. By Stan Humphries stand as the chief economist of zillow dot com stand welcome to the show good morning. Good you know -- I've been dying to talk to you because I've been. How resting my work -- June night two out and buy a house tonight and I'm trying to. Helper determine whether town might be a buyer's market or seller's market you've got some information that would help her and all of our other listeners. Determine you know the the value of that town whether it's a good time to buying in that town her way there to be time to -- how to use that -- -- Yet we've basically try to categorize all the cities across the country and all the veterans -- -- -- -- in the weather and in terms of whether the fire was in the negotiating cumulative -- And what we looked at that we looked at I would discounting. -- to -- in the past month. What to discover what top finalist prize in the final -- -- in the -- local election and on the market. What is sold in what we found was that overall Boston has actually -- pretty balanced market right now in terms of looking it over across the and all the metro is. But but actually just about that would in Boston got a lot of variation with -- market in -- and others in the market the there were really more worst sellers were more control -- more market like Belmont in bridge. Melrose. -- the couple was there. That bird. That's what goes through seller's market she said boost the. So there's a seller's market and on the other end and there's a market where homes are moving more quickly then in the Boston averaged just areas lessen your listings have price that. And on the other end of the spectrum the market like Concord well -- North Andover Salem. There welcome. It goes our way. Those -- buyer's market. That's correct but it does go to our markets markets where buyers are much more control because homes are hanging around longer there's there's more discounting going on so. In terms of negotiating leverage those markets were where buyers have been more leverage -- and other markets. Maybe give us an example like if you're going in to try to buy a house in a buyer's market. What kind of a discount -- get off the asking price. Well you know at a market like -- but for example of these with a Boston average. It is homes are hanging around about 121 days. About group with four months in Concord. The -- elements in his remark about a 167 days. Up 43% would be it was. And -- -- the that it does scale. And in. You know Concord the discount about but 5%. I sent off the gas so on a million dollar house again it for 950. That's right him even remembered that that the that the -- the final lap. Right there's probably a lot of this get a -- going on between initial price bottle that up the final price up 5% of. Now -- and it went about in a seller's market that you mentioned that Cambridge's a seller's market how much of a discount are they taking in the price off the asking price. -- in Cambridge. It visitors the blues got much much less about 12% off the final -- Price. And it'll only about 12% of what in the past month that quite. So that we 3% conquered so a lot what was into the price cuts and then he'd just come off that oil prices really only 2% wears it. You know more like 5%. Stand what do you anticipate in terms of new inventory coming to the market because. If you have -- we vote for closure safe Freddie Mac and alienate pro foreclosures there hit. Doesn't that put a ton of inventory and drive prices down. You know it it did does and you know I think we generally thought we would you higher pace of foreclosures after the national. Foreclosures settlement you know I think what really happened was we had an uptick in foreclosures starts but the foreclosure. Completions. Seems to be continue to go down but the big reason for that is that lenders are actually get more creative about trying to. Remedy goes through that foreclosure status but he -- do more short sales. Deed in lieu of foreclosure or maybe it's resorting to principal reduction in order modified mortgage -- -- And so they're trying to keep the people in the house -- work. I read it and are reportedly goes on zillow. Bank of America was actually taking a pig a thousand of their homes and renting them out they said you know we're not gonna foreclosure on foreclose on these children well -- -- that we're not gonna put him on the market. Are you seeing banks do creative things like that rent them out for few years but he five or ten years before the it -- as opposed to selling on the market and a 50% discount. Yeah they get a Bank of America it if it. Did rule that out in the kind of a pilot projects you that would work -- we can that be expanded much beyond that initial pilot and other banks that got on that. Generally what's been happening is there's -- Wednesday that the -- which they let these new foreclosures in the marketplace. And and in doing it and -- what you would think the market can absorb it but yet there's definitely you know a lot more respect -- -- -- toward shortages because we we expected foreclosure -- to be higher. And then we thought that you know obviously what buyers looked at by the exact spot in the market dollars -- exactly -- these -- -- -- -- -- market so. People are put -- on sale what they were war. Stand eat here earlier in the year when we chatted I think he anticipated that 2012. Will be the each year in a row. With declining real estate prices he still stand by that is that he do you think this is gonna be another year when you look at the year overall and you compare to 2011. Price is still gonna be down from 2011. But the calendar year we think you're gonna be slightly down but I guess -- -- a more important number a look at is probably -- forward twelve month forecast. Which right now nationally looking pretty flat -- that we actually think that. Hold still picture then they overall housing market is held together better and for longer than it did -- two years -- it doesn't and doesn't eleven. We got off to great start here in any kind of petered out but we were seeing ourselves. Really hang together for much longer and we think that may indicate that actually we -- gonna see black whom died of next year. Okay so flat for the next year did they start to increase in 141516. Went went. Well how long do we have to wait before we see any substantial increases in property values. Well generally we still expect most markets to via an early low flat bottom that means. We still think it's probably going to be through 26 team depreciation rates that are gonna look more like one to 3% which remember equations written about 2% we -- bit beauty and it's roughly going to. Hardly keep up with inflation but post quite sixteen we expect on our appreciation pick up more in the two and a half to 5% rate which is normal. But of course those that expectations are being defied some. Somewhat in markets but a lot of negative equity like Miami in Phoenix where -- -- really you know appreciate it about 2% were networking at you know real price -- right now on the market. Why why Phoenix and I thought Phoenix had a lot of foreclosures. They're really -- in Miami as well it is what what seems to be happening is that. There's such aggressive investor demand in the market where investors are trying to -- except these chief distressed you -- an amateur in the rental properties. And finally. Pump prices got so low Olympian. Miami because local prices they're down more than you know and so it -- percent that it really got mainstream buyers up. And that's occurring exactly the time where sellers don't look at -- over the markets more of a negative equity it's delicate but -- on the market. That is really really supply demand imbalance which is driving up prices more than more than we expected. Yeah and and out in Arizona we saw houses selling. And it really fraction of -- cost to build -- really no incentives to build a new house in Arizona because Z you can violent used to house for. I don't know anywhere from you know seven DD percent of what a new one would cost. That's right and any kind of mix and about before. Close your pictures well securities mentioned but if you look at the the richness of the market in terms of foreclosures has been declining as well -- because. -- foreclosure completions now. The number of foreclosures and around percent of the market going down we're down nationally bank about 17% of sales in May -- foreclosure resales which is down from about 20% two months ago. That depend actual mix of what's available out there does is selling is getting is that if you -- -- in the world war. Yeah all right we'll stand thank you very much for your time sure appreciate it. At stand Humphries joining us is chief economist at zillow. In junior heard it here. Each year in a row where prices are gunned down I now and I feel bad is it your young -- tearing your say 20s30s. He bought a place spot and later though. -- or even right now. You gonna let you live in that place until you die -- OK you're gonna be in their til you're 75 in the united you -- -- that -- yeah a lot of analysts out there saying that we might not see housing recovery in our lifetime. I've I've read these right and it downer here I'm Debbie downer. It's it's steady reality.