Zillow chief economist Stan Humphries confirmed that home prices have not hit bottom yet as values declined 1.1% in the fourth quarter last year, but there are good signs ahead for the market.
In 2011, prices fell 4.7% with an average home selling for $146,900 across the nation. However, the Seattle, Wash.-based real estate database firm forecasts smaller declines in home values during 2012.
According to Zillow's home value forecast, prices are projected to only drop 3.7% this year. This forecast uses data from past home value trends and current market conditions, including leading indicators like home sales, months of housing inventory supply and unemployment, to predict home values over the next 12 months for the nation and the 25 largest markets tracked by Zillow.
“While it may be disconcerting for homeowners to see values nationally fell at a fairly rapid clip at the end of last year, that trend won't last through 2012,” Humphries said. “The fourth quarter's weak performance proves that pronouncements of a bottom in home values have been premature, but the good news is that 2012 will prove to be a better year than 2011.”
Some of the hardest hit markets during this housing crisis like Phoenix, Los Angeles and Riverside, Calif. are expected to reach bottom this year in home values, Zillow said. Other markets that are likely to reach a bottom and see home values increase or remain flat in 2012 are Baltimore and Washington DC.
Zillow projects some Metropolitan Statistical Areas will end 2012 without any significant price increase and their values won't bottom out until 2013, such as Dallas, Denver, Miami-Fort Lauderdale, Fla., New York, Pittsburgh, San Diego, San Francisco and Tampa, Fla.
“A bottom may continue to elude the nation as a whole in 2012,” Humphries added. “Fortunately, against a backdrop of modest further declines in home values, we expect that home sales will pick up briskly this year as affordable prices bring more buyers to the table—especially investors and second-home buyers.”
