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Three to five years for a recovery in US property market

Annually, the Zillow Home Value Index fell 4.6% from November 2010 to $147,800 and has returned to late 2003 levels. It will be three to five years before there is a recovery, the firm predicts.

Regionally, home values appreciated or remained flat from October to November in 60% of the 165 housing markets covered by Zillow, compared to 24% last year.
Major metropolitan statistical areas (MSAs) that experienced flat or increasing home values include Los Angeles, Washington, Miami/Fort Lauderdale, San Francisco and Detroit.
On an annual basis, the median home value is down for nearly all, some 90%, of the 165 MSAs covered by Zillow, although the rate of annualized depreciation has slowed significantly in the majority of the markets.
Meanwhile, foreclosure liquidation rates have fallen steadily since the robo-signing controversy in late 2010 as banks slowed down their processing of foreclosures.
In November, 8.1 out of every 10,000 US homes were foreclosed upon. Foreclosure liquidations peaked in October 2010 at 11 out of every 10,000 homes and could rise again pending the attorneys general settlement which will give banks more certainty over the foreclosure process, therefore opening the backlog of foreclosures.

‘Overall, we are seeing encouraging signs in housing data such as sequential months of slowing depreciation rates, stabilizing markets and organic improvement in value trends, largely in the absence of government policy intervention,’ said Zillow chief economist Stan Humphries.

‘However, we're not out of the woods yet. Supply and demand are still not in balance in many markets and we do expect higher foreclosure liquidation rates near term, which will put additional downward pressure on home values,’ he explained.

‘Even with the anticipated increase in foreclosures, look for 2012 to be a transitional year in which home values fall modestly followed by a prolonged period of flat home values. We're still three to five years away from normal housing market conditions,’ he added.