To get to the projected bottom in national home values in the second half of 2011, we must first endure more months of painful home values declines, which is exactly what happened in January 2011, according to the Zillow January Real Estate Market Report. The U.S. Zillow Home Value Index (ZHVI), which is the median values of all homes, fell by 1.2% from December 2010 to January 2011, the largest monthly decline since December 2008. The national ZHVI in January was $172,200, down 28.2 percent from the peak in June 2006 and back to its August 2003 level (Figure 1).
Foreclosure activity was unchanged from December with 9.1 out of every 10,000 homes foreclosed upon in January. The rate of foreclosure activity peaked in October 2010 at 12 out of every 10,000, just as banks put a temporary moratorium on foreclosures due to the “robo-signing” controversy. The effects of the self-imposed moratorium are currently being seen with lower-than-expected rates of foreclosure activity. This rate is expected to rise in the coming months.
As we move through 2011, Zillow Chief Economist Dr. Stan Humphries believes that we’ll start to see some stabilization in homes values, followed by a bottom in later this year. However, as Dr. Humphries explains in his Zillow Real Estate Research brief, there are several possibilities that may inhibit a bottom in home values in later 2011, namely the elevated rates of foreclosure and excess housing inventory.