Nationwide home values will decline 3.7 percent in 2012, according to a forward looking study released today by Zillow.com, which represents an improvement over the 4.7 percent decline last year. Most markets will see shrinking home values this year, Zillow said.
Prices have now fallen 24.2 percent since the peak, and while the report expected record-low interest rates to fuel more sales activity this year, much of that will be concentrated in the cheap supply created by the foreclosure crisis. Evidence of this phenomenon was already present in the latter half of last year, when prices in the bottom third of U.S. housing remain unchanged even as top tier home values declined 0.3 percent. That marks a reversal of the trend seen throughout most of the previous three years.
The report said 2012 would be a transitional year for housing, though 14 of the top 25 housing markets, led by Atlanta (8.5 percent), Chicago (7.9 percent) and Seattle (6.6 percent) are expected to show significant further price deprecation. However, Los Angeles and Washington, D.C. are expected to undergo home value increases of 1.2 percent and 1.3 percent, respectively. Zillow.com predicted New York area home prices would fall another 1.7 percent this year.
Zillow.com previously said it expects prices to bottom in 2013.
Much of the widespread declines can be attributed to renewed foreclosure activity as banks emerge from the robo-signing scandal. In December, foreclosed properties comprised 19.1 percent of U.S. home sales compared to 17.4 percent three months earlier. — Adam Fusfeld