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Zillow reports home prices dropping, not coming back up soon

Zillow’s forecast

Prior to the monthly release of Case-Shiller’s 10- and 20-city composite report on home price indices (HPI), real estate search company Zillow analyzes their own data to forecast what they believe the indices will be, and in July when they prepared a forecast, they were quite accurate.

Zillow is forecasting that the Case-Shiller 20-city HPI will be down 0.3 percent from the previous month and down 3.8 percent over the year (seasonally adjusted), and that the 20-city HPI will have dropped 0.2 percent over the month and 3.5 percent year over year.

The overall economy remains weak and has taken a toll on housing in a particularly drastic way. Zillow Chief Economist Dr. Stan Humphries anticipates the Case-Shiller 20-City Composite index will show monthly depreciation in August and expects this downward trend to continue as the year comes to a close, a forecast that real estate practitioners should be informed about and prepared to deal with.

What will happen in coming months?

“We expect to see continued home value depreciation as unemployment and negative equity remain high. The large foreclosure pipeline will produce relatively low priced REOs in the market putting downward pressure on prices going forward, and we do expect the pace at which homes exit this pipeline to pick up in the near-term,” Humphries said.

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“After showing monthly appreciation earlier this year and building some momentum, recent weak economic data is starting to be reflected in home values. Existing home sales have been disappointing, with September sales down 3% from August (even though August existing home sales were better than expected). While the September jobs report beat expectations, it still remained relatively weak,” Humphries said, also noting that consumer confidence remains low home value depriciation, unemployment and negative home equity remain elevated.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.


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