U.S. housing prices will continue to fall in 2012, but the rate of decline is slowing, according to two separate Zillow.com reports cited by Bloomberg News.
Thanks in part to foreclosures, housing prices will fall further until at least 2013, according to a survey of 109 economists, despite record low mortgage rates. Yesterday’s existing home sales report supported that belief, showing prices declined 3.5 percent in November. When values do rise, the same economists said they probably wouldn’t match the prices recorded prior to the housing collapse.
Prices are already down 31 percent from their July 2006 peak, the most recent Case-Shiller Index shows, and they will drop another 7 percent, according to Scott Simon, head of mortgage and asset-backed securities at California-based Pacific Investment Management.
“You’re going to look at a graph someday, and it’s going to look like somewhere between Jan. 1, 2012, and June 30, 2013, housing bottomed,” he said.
The good news, according to another Zillow.com report, is that housing prices are inching — and not plummeting — towards that bottom. In 2011, the total value of U.S. housing probably fell by about $681 billion, a 35 percent decrease from the $1.1 trillion lost in 2010. The first six months of the year were responsible for about two-thirds of 2011’s total loss. This year’s total loss is the smallest in four years.
“While homeowners suffered through another year of steep losses, the good news is that homes are losing value at a substantially slower pace as the market works its way towards the bottom,” said Stan Humphries, Zillow’s chief economist. [Bloomberg] and [Bloomberg]