Zillow: Housing Market to Hit Bottom By Late ’12

Apr 25, 2012 12:01am
gty home for sale ll 120321 wblog Zillow: Housing Market to Hit Bottom By Late 12

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Online real estate marketplace Zillow said home values rose 0.5 percent in March from February, the largest monthly increase since May 2006 when the housing recession began.

Zillow’s report describing the first quarter follows two other reports about the housing market released on Tuesday.

The Standard & Poor’s/Case-Shiller home-price index showed average home prices tumbled to their lowest level in nearly a decade, after prices dropped in February from January in 16 of the 20 cities it tracks.

A separate report from the Commerce Department indicated new home sales fell last month by the most in more than a year to a seasonally adjusted annual rate of 328,000 units.  That followed a 7.3 percent increase in February.

“I think the variety of data points of housing market we’re getting this week all point to a slowly healing housing market,” Stan Humphries, Zillow’s chief economist, said. “We think of it as a bottoming process, as opposed to the bottom being a discrete point in time.”

Humphries said the “bottoming process is well under way and is made up of new home sales that have reached bottom and are starting to rebound a bit.”

The Zillow Home Value Forecast shows that national home values will fall 0.4 percent over the next 12 months, suggesting that U.S. home values could reach bottom in late 2012.

Humphries said buyers with longer time horizons, retirees, second home buyers and investors, are returning to the residential marketplace.

“The next stage is for the more mainstream buyer to get off the fence and start buying,” he said. “All that activity ultimately leads to slowing depreciation rates and ultimately a bottom in home values themselves.”

The rate of homes foreclosed fell to 2009 levels in the first quarter of 2012.  Zillow reported 7.4 out of every 10,000 homes foreclosed, down from 8.3 out of every 10,000 homes foreclosed in February.

The report stated that 19 of the 30 metro areas covered by the Zillow Home Value Forecast will reach a bottom in 2012, or have already reached a bottom. Zillow expects several of those areas to see significant home value increases in the next 12 months, including the Phoenix (6.5 percent) and Miami-Ft. Lauderdale (5.6 percent).

Strong performance in Miami and Phoenix exceeded Humphries’ expectations for those markets given the high levels of negative equity, or homes that are worth less than their mortgage values, in those regions.

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