October 12, 2011 (Chris Moore)
Home values surprisingly inched upwards in August according to Zillow, despite all indicators to the contrary in July. However, the surprise price increase doesn’t change their assessment that home values won’t hit bottom until 2012.
In last month’s report, Zillow expected home values in August to decline due to disappointing July existing home sales and pending home sales reports along with several reports of weaker consumer confidence in August.
In September, The National Association of Realtors® (NAR) reported that existing home sales jumped up a surprising 7.7 percent. Although not mentioned, it’s very likely the jump in sales was due to home buyers trying to beat the new lower loan limits that were being implemented on October 1, but which many lenders had already started imposing by the middle of August.
Consequently, home value trends didn’t weaken as much as Zillow had anticipated a month earlier. Home values increased a very modest 0.09 percent from July to August while values were still down 4.5 percent from August 2010.
Home prices have declined 28.3 percent since the market peak in June 2006.
Seventy-four of the 157 metropolitan areas covered in the Zillow Real Estate Market Report posted a monthly decline in home values in August, 68 areas posted home value increases, and 15 areas remained flat.
Mobile, AL, suffered the biggest monthly price decline in home value of 2.65 percent while the largest increase in monthly home value was 2.19 percent posted in Ann Arbor, MI.
Year-over-year, the largest increase in home value was 6.5 percent in Fort Myers, Fl, while the largest decline was 22.6 percent in Gainesville, GA.
The rate of foreclosure liquidations remained about the same in August as the previous month, 9.2 out of every 10,000 homes, and is still well below the rate of 10.9 out every 10,000 homes in October of 2010, just before the robo-signing controversy resulted in a slow down in foreclosure processings.
Foreclosure re-sales increased in August, from 18.9 percent of all sales in July to 19.5 percent in August.
Despite the surprise increase in home values in August, Zillow’s assessment of future home values remains unchanged; home values aren’t expected to bottom until 2012 at the earliest.
Negative equity and unemployment will continue to be the two biggest factors affecting home values and eventually the pace of foreclosures will pick up again, putting more REO properties on the market and more downward pressure on home prices.
Tags: zillow, Real Estate Market Report, home values, home prices, consumer confidence, existing home sales, pending home sales