No Housing Bottom Until 2012

May 9, 2011 No Comments »

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Just when things appeared to be getting better, Zillow released its Q1 2011 Real Estate Market Report.

In the report, the company said U.S. home values posted their largest quarter-over-quarter decline since the fourth quarter of 2008, falling three percent.

Since home values peaked in June 2006, they’ve fallen a staggering 29.5 percent.

At the same time, negative equity reached a new high of 28.4 percent, meaning more than a quarter of those who own a single-family residence have a mortgage that exceeds the value of their home.

With regard to the top 25 metropolitan areas, it’s worst in Phoenix, where 68.4 percent of homes with mortgages are underwater.

Conversely, just 6.8 percent of homes in Pittsburgh, Pennsylvania are underwater, likely because home values didn’t experience exponential growth and subsequent declines.

That’s not good news, considering it’s very difficult to refinance or sell with negative equity, pushing homeowners to go after alternatives such as short refinances and short sales.

Foreclosures have also been on the rise throughout the first quarter as banks and mortgage lenders ended moratoriums and allowed home forfeitures to resume.

In fact, one out of every 1,000 homes in the country was lost to foreclosure in March.

All that said, Zillow doesn’t expect a housing bottom until 2012, at the earliest. And it could even be later than that…

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