In its most recent housing report dated November 9th, 2010, Zillow paints a bleak picture of a housing market in free fall.
In the report, Zillow economist Stan Humphries says that the real estate market has yet to hit rock bottom. Humphries not only sees no signs of a stabilization but predicts that the unprecedented double-dip in the real estate market is turning into a free fall.
A Bleak 4th Quarter 2010 and a Disastrous 2011 Ahead
The home value depreciation began to accelerate in September 2010 due to two main contributing factors: lower transaction volumes and an ever growing level of inventories. As we pointed out earlier, the stubborn persistence of the housing market slump has some good reasons.
Stan Humphries goes on to say that home values dropped 0.4% from August to September and 4.3% from September 2009. How dire the situation in the real estate market really is shows the fact that home values are 25% below their peak. For a total of 51 (fifty-one) straight months, prices have been in steady decline. Given how this trend is shaping up for the months ahead, we are going to quickly match the spectacular length and severe depth of the declines the country had experienced during the Great Depression and not yet since.
In order to put today’s numbers in perspective suffice it to say that from 1928 to the end of 1933 (60 months), nominal home values dropped off the cliff by a whopping 25.9% . We are not there yet but getting closer by the minute.
According to Zillow, prices are not going to to stabilize at least until the summer of 2011.
Nationally, we now don’t expect home values to hit bottom until first half of 2011 at the earliest due to continuing increases in foreclosure volumes.
In the meantime, new economic realities will be taking shape. With the Republicans wielding decisive power over the budget (Markets Expect Political Gridlock And Why It Could Actually Be A Good Thing) about the only form of stimulus we are going to see will be of Bernanke’s making (The Fed Is Buying Up Long-Term Debt Of The U.S. Government (On Credit!)).
Unless something unforeseable happens, we will beat Depression-era price declines hands down.
Read the full report here: Zillow Real Estate Market Report.