Homeowners who can’t help checking their address on Internet property value trackers like Zillow’s “zestimate” likely weren’t happy with Stan Humphries, the real estate website’s chief economist, when house prices were plunging in recent years. An architect of the algorithm behind the “zestimate,” Humphries is probably more popular now that home prices on Zillow are rising again. 2013 was a very strong year for real estate across the country and even in the economically challenged Providence area, where Humphries was in town recently to network with local real estate agents who use or are looking at using Zillow’s data platform.
As the spring homebuying season ramps up, Humphries discusses whether the national and local markets can continue to climb through rising interest rates and low inventory.
PBN: The housing market really took off last year. Can that continue in 2014 or is a slowdown inevitable?
HUMPHRIES: Nationally we are still in the middle of an incredibly robust recovery. We have bounced off the bottom quite strongly. This past year home values across the U.S. rose 5.6 percent, which is quite strong considering the long-term historical average appreciation rate is 3.5 percent. That is to be expected after such a bad recession and moving into the spring season we are in a situation where there are more buyers chasing fewer homes, leading to price spikes. A big reason there are more buyers is we still have incredibly low mortgage rates: 4.2 percent on a 30-year, fixed-rate mortgage is still very low and that has stimulated buyer interest. Buyers are finding fewer sellers and the reason they are finding fewer sellers is real inventory constraints in most markets, especially high amounts of negative equity. … Certainly the pace of foreclosures is dropping, but negative equity is still quite high. Nationally, it is 19.4 percent and in the Providence metro it’s 21.5 percent.