Zillow: Market Will Not See Bottom Until at Least 2012

With the release Tuesday of the ""Zillow Real Estate Market Report,"":http://www.zillow.com/blog/2011-10-11/home-values-tread-water-in-august/ which recorded a 0.1 percent increase in home values from July to August, Zillow's chief economist Stan Humphries released his prediction that the housing market will not bottom out until at least next year.

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""At this point, we maintain the expectation that a definitive bottom will not occur until 2012 at the earliest,"" Humphries stated.

With a 0.1 percent monthly increase, August home values posted a 4.5 percent decrease year-over-year, according to Zillow, which is based out of Seattle.

Home values are currently 28.3 percent below their June 2006 peak.

""Today, the Zillow Real Estate Market Report reveals a market in which home value trends didn't weaken as much as we feared a month ago,"" Humphries stated.

""We do remain concerned, however, about the impact that recent economic turmoil and renewed fears of another recession will have on September home sales and home value trends,"" Humphries stated.

For the month of August, the foreclosure liquidation rate â€" the number of loans lost to banks â€" was 9.2 out of 10,000 homes. This rate remains lower than rates recorded before foreclosures slowed as a result of robo-signing lawsuits. For example, in October 2010, the rate was 10.9 out of every 10,000 homes, according to Zillow.

""We believe that both foreclosure re-sales and foreclosure liquidation rates are suppressed currently and that this constraint is improving the supply-demand imbalance in many markets, but doing so at the expense of longer or deeper negative trends in the future,"" Humphries stated.

Some of the hardest hit areas continued to maintain high foreclosure liquidation rates. Most notably, in Las Vegas and Phoenix more than 30 out of every 10,000 homes were liquidated in August, according to Zillow.

""Due to the robo-signing controversy, the pace of foreclosure liquidations has been slower than it would be otherwise, which is impacting home value trends positively,"" Humphries noted.

""Eventually the pace will pick up again, putting more bank-owned homes into local markets and putting additional downward pressure on prices,"" Humphries added.

He continued: ""We remain encouraged about the organic stabilization in home values that we have been seeing absent the federal home buyer tax credits, but we remain concerned about the impact that recent economic turmoil and continued weak economic indicators will have on future home sales and home value trends.""

Of the 157 metropolitan statistical areas (MSA) Zillow surveys in its Home Value Index, 68 experienced increases in value, while 74 experienced declines in value in August. Home values in 15 MSAs remained constant over the month.

Detroit has now posted five consecutive months of value appreciation, while another hard-hit area, Ft. Myers, Florida, has recorded nine consecutive months of increases.

Detroit's home values rose 0.55 percent from July to August, while Ft. Myers' home values rose 0.7 percent.

""There is no change in our assessment of the two biggest long-term factors affecting home value trends: negative equity and unemployment,"" Humphries states.

Therefore, he concludes, ""Nothing we have seen so far causes us to change our expectation that we won't see a definitive bottom until 2012 at the earliest.""