Stan Humphries, chief economist of ZillowA worse than expected Case-Shiller report and the mortgage settlement have pushed expectations for home prices down, Stan Humphries, chief economist of Zillow, said on Yahoo! Breakout (see video above). Despite headwinds of an economic recovery taking hold in the U.S., economists expect housing prices to fall further than initially estimated, according to a survey by Zillow.com. [more]

About 28.6 percent of U.S. single-family homeowners’ mortgages are underwater as a result of a lower rate of foreclosure liquidations and relatively flat home values, compared to 26.8 percent in the second quarter, according to Zillow.com’s third-quarter market report. While the pace of foreclosures has slowed, liquidations remained high in September, with 8.7 of every 10,000 homes being liquidated.

But despite recent economic uncertainty, U.S. home values remained almost unchanged from the second quarter to the third quarter of 2011, declining by just 0.2 percent. Home values have fallen 28.8 percent since they peaked in June 2006, according to the Zillow Home Value Index, which fell 4.4 percent year-over-year to $171,500. – Katherine Clarke [more]

Home values are falling in many cities across the United States, including New York, which saw a 5.1 percent drop in prices, according to the Wall Street Journal’s latest quarterly survey of housing market conditions. The survey found that prices declined in all of the 28 major metropolitan areas tracked during the fourth quarter of 2010 when compared to a year earlier. As the number of unsold homes increased, inventory levels rose in many markets, particularly in Long Island, which had enough homes on the market at the end of December to last 15 months at the average sales pace. The supply of unsold homes stood at 14 months in Charlotte, N.C., and Nashville, Tenn., and at nearly 13 months for northern New Jersey. Comments

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CNBC’s Diana Olick talks about the best and worst local markets for 2011 in the video above. If investors want to buy, hold and rent out a home, the best places to buy, based on five metrics — price-income ratio, price-rent ratio, price declines, foreclosure rates, foreclosure resales include Poughkeepsie, NY, Harftord, Conn., and Pittsburgh, Penn. “Markets like Hartford and Pittsburgh are on that list because they’re about on par now so they’ve returned back down to their levels of affordability before the housing run-up,” said Stan Humphries, chief economist at Zillow. In Hartford, he added, “about 10 percent of monthly transactions are foreclosure resales.” The worst markets to invest include Atlantic City, Philadelphia and Baltimore. [more]

Stan Humphries

Poor credit scores are becoming an increasingly difficult hurdle for potential homebuyers to overcome, according to real estate website Zillow.com, which says roughly a third of Americans currently have credit scores so low that they’re unlikely to qualify for a mortgage. While the declining credit scores — nearly 30 percent of Americans have a credit score of 620 or lower — could explain this, changing attitude toward home lending could also be at fault. Stan Humphries, chief economist with Zillow, said that the recession has changed many lenders’ mindsets regarding credit scores. “Four years ago, in the era of easy-to-get subprime loans, many borrowers with low scores did buy homes, which in turn helped contribute to a housing bubble,” Humphries said. “Today’s tighter credit is a predictable response by banks after the foreclosure crisis.” TRD

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As the 30-year fixed-rate mortgage continues to slide, interest rates are not going lower and the housing market is still shaky, said Stan Humphries, chief economist at Zillow, in the Fox Business video above. The main problem is unemployment, which is leading to foreclosures, said Craig Jarrell from Texas-based Iberiabank Mortgage. “It doesn’t matter how low the rate is, if you don’t have a job, you can’t buy a house, and if you can’t sell your house, you can’t buy a house,” Jarrell said. Another tax credit would “be a waste of money,” Humphries added, and would not help the situation. He predicts that the housing market will clear up on its own, “through a natural process.”

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Once seen as a rock solid wealth-building method, homeownership is
losing its cache among investors and economists in the wake of the
housing market crash, according to the New York Times. While many
investors once assumed that home values would appreciate — barring
unforeseen influences like neighborhood decline and natural disaster —
that logic has been turned on its head, according to Stan Humphries,
chief economist with real estate website Zillow.com. “There is no iron
law that real estate must appreciate,” Humphries said. “All those theories [that] advanced during the boom about why housing is special… didn’t hold up.” [NYT]

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Homeowners are more pessimistic about the short-term future of home values in their local market than they have been in the past three quarters, according to the Zillow.com second-quarter homeowner confidence survey. One-third believe home values in their local housing market have not yet reached a bottom, while 38 percent believe they have already reached a bottom. More than one quarter — 28 percent — of U.S. homeowners said home values will decrease in the next six months, up from 20 percent in the first quarter. Additionally, 30 percent believe home values will increase, down from 42 percent in the first quarter. “As homeowners have been so inundated recently with news of declining home sales post-tax credit, it’s no surprise that they would become more pessimistic about the future of home values,” said Stan Humphries, chief economist at Zillow. “Homeowners have become much more responsive to current market conditions than they were just two years ago, when a more typical reaction was denial.” TRD

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Existing home sales may continue to drop once the first-time homebuyer
tax credit expires, Stan Humphries, chief economist for Zillow, told NBC. Yesterday, the National Association of Realtors reported that existing home sales — which had been at elevated levels — dipped in June.
Humphries said the tax credit, for which the contract deadline was
April 30, had increased demand, driving sales up. But the extended
closing deadline is Sept. 30, and he said he expects a decline in home
sales followed by a long period of flat appreciation rates for upwards
of three years in the wake of the credit.

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Despite the recent mortgage crisis, homebuyers are now spending even less time shopping for a home loan than they did two years ago, according to a report from Zillow.com. Borrowers also solicit fewer quotes today than they did in 2008, obtaining an average of four quotes on a home loan, compared to five quotes two years ago. One third of the respondents to Zillow.com’s survey said they spent less than two hours shopping for a mortgage, less than the four hours the average buyer spends researching a computer purchase. [more]