Home buyers take notice: U.S. home values posted their largest decline in the quarter ended Dec. 31 in two years, some returning to prices not seen since before the housing bubble.
And some housing market economists are saying prices have not hit bottom yet.
According to the real estate website Zillow.com, U.S. home values fell 2.6 percent in the fourth quarter of 2010 to a median value of $175,200.
Of the largest 25 metropolitan areas covered by Zillow, the highest median was in San Francisco, at $485,700, despite a quarterly decrease of 4.1 percent in that region. Of the 25, Detroit had the lowest median, at $73,200, a 7.5 percent decrease in that area.
Zillow attributed the overall decline, in part, to the waning effect of homebuyer tax credit stimulus.
Amy Bohutinsky, vice president of marketing at Zillow.com, said with home values and mortgage rates remaining near-record lows, the next six to 18 months may be a good time to buy, depending on the market and if you plan to hold onto a home for five to seven years.
"Buyers are in the driver's seat right now in most markets," said Bohutinsky. "Nationally, prices have reset to 2003 levels."
Bohutinsky said home values have fallen 27 percent since the peak of the market in 2006. She said the rate of homes selling for a loss has steadily increased over the past six months, but the housing market has not seen the bottom yet. Bohutinsky expects home values to fall another 3 to 5 percent this year.
"We expect sales to pick up in early 2011, and home values will stabilize after several months of increased sales activity," she said. "We will likely reach a bottom in home values in the latter half of the year."
Prices will continue to fall, especially in hard-hit markets like Las Vegas, Atlanta, Detroit and Phoenix, Bohutinsky said.
Chicago, Cleveland, Dallas and Stockton, Calif., also likely will see significant declines, attributable to high rates of monthly depreciation in these areas, she said. And, she added, it will take some time before the housing values in those areas reach bottom.
Robert Simons, a professor of urban studies at Cleveland State University, said recovery may depend on the local market, but he does not see a bottom in 2011.
"Local niches may still glimmer like gems, but recovery will evade us until at least 2012-2013," said Simons. "Housing starts usually lead us out of recession. Because this cannot be so now, recovery will be slow."
It may be a great time to buy, Simons said, if you are patient, "can wait out the torturous short-sale process and can get a loan."
But all is not lost for those who are hoping for an uptick in housing prices.
"We are seeing some evidence that depreciation rates are turning in the right direction," said Bohutinsky.
She pointed out that home values in Miami, for example, are not falling as fast as they were in early 2010.
"We expect to see home sales pick up in these markets over the next couple of months because low prices are pulling a lot of buyers off the fence," she said.