March 9, 2011 (Jeff Alan)

Home values declined at an accelerated pace in January according to Zillow’s Home Value Index for January. Monthly home values declined 1.2 percent in January with annual depreciation hitting 7.3% percent. The rate of monthly depreciation is the highest seen since December 2008. The median home value in January was $172,182, down 28.2 percent from the peak in June 2006.

Out of 131 metropolitan regions Zillow surveys, 124 of the regions experienced year-over-year price declines, four regions saw increases, and three areas were flat from year ago levels.

The regions experiencing the largest annual declines in home values included Ocala, Florida; Pueblo, Colorado; Mobile, Alabama; Flagstaff, Arizona; Atlanta, Georgia; Spokane, Washington; and Detroit, Michigan.

The survey also reports that foreclosure liquidations remained steady at 0.91 percent, down from the peak of 0.13 percent in October.

Zillow attributes the recent declines in foreclosure liquidations to delays and the lengthened processing times due to the “robo-signing” controversy and was not sure at this time if the new lower level might be a more permanent peak if mortgage servicers were to maintain a slower overall foreclosure process or if it was a transitory low point because of the moratoriums the banks imposed on themselves temporarily to correct paperwork processing problems and if so, once the problems are fixed, they expect the foreclosure liquidation rates to rise upward again.

At this time, Zillow expects home prices to stabilize and bottom out sometime later this year given the current economic forecasts. However, further price reductions may be seen if foreclosure rates continue to be elevated and are not offset by higher demand resulting from declining unemployment and a higher post-recession household formation rate.

To see how your metropolitan area fared, click here.

Tags: Zillow, home value index, home depreciation, declining home values, foreclosure liquidations, economic forecasts, unemployment