An economic update presented by Stan Humphries, Chief Economist at Zillow.

1. Three Things Nobody's Telling You
About The Housing Market
National Association of Real Estate Editors
June 2011
Stan Humphries, PhD
Chief Economist
stan@zillow.com
206.470.7127

2. #1: While the purchase market is still down, rentals are getting stronger
1.2 to 2.2 million
homeowners
transitioning from
owners to renters
2 Source: Zillow,
Census

3. #1: While the purchase market is still down, rentals are getting stronger
Household formation
was picking up again
until recently.
Outstripping new home
completions by about
700K annualized.
3 Source: Zillow,
Census

4. #1: While the purchase market is still down, rentals are getting stronger
Slow but steady
improvement in multi-
family housing starts
versus fits and starts
for single-family
4 Source: Census

5. #2: For non-distressed, there’s no double-dip
5 Source: Zillow, S&P

6. #2: For non-distressed, there’s no double-dip
Good news: Organic
improvement in
depreciation rates
for four months
now.
Bad news: Current
pace of
improvement puts
bottom in mid-
2013.
6 Source: Zillow

7. #3: There’s no free lunch – tax credits didn’t really work
Existing Home Sales (millions)
7
6
5
4
3
2
1
0
Jan
Jun
Aug
Jan
Jun
Aug
Jan
Jun
Aug
Jan
Nov
Dec
Nov
Dec
Nov
Dec
Mar
Apr
Mar
Apr
Mar
Apr
Mar
Apr
Jul
Jul
Jul
Feb
Sep
Oct
Feb
Sep
Oct
Feb
Sep
Oct
Feb
May
May
May 2008 2009 2010 2011
7 Source: NAR

8. #3: There’s no free lunch – tax credits didn’t really work
Existing Home Sales (millions)
7
6
5
4
3
2
1
0
Jan
Jun
Aug
Jan
Jun
Aug
Jan
Jun
Aug
Jan
Nov
Dec
Nov
Dec
Nov
Dec
Mar
Apr
Mar
Apr
Mar
Apr
Mar
Apr
Jul
Jul
Jul
Feb
Sep
Oct
Feb
Sep
Oct
Feb
Sep
Oct
Feb
May
May
May 2008 2009 2010 2011
8 Source: NAR

9. #3: There’s no free lunch – tax credits didn’t really work
Existing Home Sales (millions)
7
6
5
4
3
2
1
0
Jan
Jun
Aug
Jan
Jun
Aug
Jan
Jun
Aug
Jan
Nov
Dec
Nov
Dec
Nov
Dec
Mar
Apr
Mar
Apr
Mar
Apr
Mar
Apr
Jul
Jul
Jul
Feb
Sep
Oct
Feb
Sep
Oct
Feb
Sep
Oct
Feb
May
May
May
2008 2009 2010 2011
9 Source: NAR

10. What we're watching in the market right now
• Conforming loan limits: We don't think they will have much
of an effect, but we're watching closely.
• Foreclosure re-sales: We think they will peak in 2011.
• Household formation rate: We’ll need these to really pick up
again in order to work down excess inventory.
10