Wednesday, December 14, 2011

Prices Decline Slightly But Show Signs of Stabilizing

While home values are continuing to decline, they are beginning to stabilize as the market nears the bottom, according to the Zillow Real Estate Market Report released Tuesday.

Since their peak in May 2007, prices have fallen 23.7 percent, according to Zillow’s data.

On a yearly basis, prices fell 5.1 percent in October, arriving at $147,000.

However, on a monthly basis, prices fell just 0.3 percent, demonstrating a deceleration in decline.

“As expected, home values continue to fall in the back half of this year due to an abundance of housing supply relative to demand,” said Dr. Stan Humphries, Zillow’s chief economist. “Potential buyers remain on the sidelines or doubled up in other households, despite record high housing affordability and historically low mortgage rates.”
Zillow, based in Washington, measures 156 metropolitan statistical areas (MSAs) each month. In October, prices declined in 95 MSAs and rose in 39.

Prices in the remaining 22 MSAs remained relatively unchanged over the month.

Some of the harder hit areas are starting to see a reprieve from their sharp declines in home values.

Miami’s prices remained essentially unchanged for the month, and hard-hit areas of Phoenix and Detroit saw slight gains – 0.2 percent in Phoenix and 1 percent in Detroit.

On a yearly basis, 10 of the 156 MSAs experienced rising prices.

In addition to stabilizing prices, Zillow reported another positive sign for the market in its most recent report. The foreclosure liquidation rate fell for in October to 8.1 out of every 10,000 homes.

This contrasts the record high reached one year ago – 10.7 of every 10,000 homes.

While Zillow reports some slight positive signs for the market, Humphries says the “crisis of consumer confidence along with high rates of negative equity, are the biggest factors hindering a housing recover.”

“However, I’m encouraged by the positive, albeit slow, progress in working down the unemployment rate, which should help to improve consumers’ appetites for buying homes,” he continues.

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