July 8, 2011 (Chris Moore)
Smaller decreases in home value depreciation may be a signal that the housing market may be stabilizing as home values fell 0.48 percent in May 2011 compared to April and are down 7.6 percent compared to May 2010 according to Zillow.com.
May was the fifth consecutive month in which depreciation showed an improvement relative to the month before since December 2010 when values were falling at almost twice the rate of 0.86 percent.
Home value depreciation has improved 0.08 percent per month on average since December 2010 and should slow after the peak summer home buying months of 2011. As a result, the pace of improvement, which has not been assisted by the benefit of tax credits or foreclosure moratoriums, has led Zillow to adjust their expectation that housing prices should now bottom-out in mid-2012.
Based on earlier market indicators, Zillow had previously predicted that they expected home prices to bottom-out in mid-2013.
Foreclosure liquidations in May reached a rate of 1.04 out of every 1000 homes which is down substantially from the rate of 1.16 out of every 1000 foreclosure liquidations recorded in the peak month of October 2010, the same month that the “robo-signing” controversy virtually put the brakes on foreclosures.
Foreclosure re-sales, not including short sales, represented 23 percent of all sales transactions in May. The percentage of foreclosure re-sales should drop slightly during the peak summer selling months as sales volume increases and then increase slightly after the summer selling season ends.
Foreclosures are expected to come to market at a higher rate in the future as the effects of the robo-signing controversy wear off, but the rate in which they hit the market could be a factor on home values for a longer period of time and could require a re-evaluation of when housing prices may bottom-out.
Tags: Zillow, home value depreciation, depreciation, market indicators, home prices, bottom-out, foreclosure liquidations