Zillow Home Value Index is now 23.8% lower than its peak, while foreclosures make up 19.1% of national resales.
“Even with the anticipated increase in foreclosures, look for 2012 to be a transitional year in which home values fall modestly, followed by a prolonged period of flat home values,” said Zillow Chief Economist Stan Humphries. “We’re still three to five years away from normal housing market conditions.”
From the perspective of Canadian investors, it means cash flow -- and not capital gains -- is likely to remain their focus in selecting U.S. properties.
In fact, in several U.S. cities, the index shows values are now more than 50% down from their peaks, including Phoenix (-56.3%), Orlando (-56.1%) and Miami-Ft. Lauderdale (-55.4%).
A smaller token of positive growth is that nine of the 25 cities covered in the Zillow index showed a gain in value in November compared to October. In previous months, nearly all cities had shown declines. Still, of those value gains in November over the previous month were meager, with no city registering more than 1%.
Only Pittsburgh, with an average value of $106,100, has shown a gain in year-over-year prices, up 1.3%.
“Overall, we are seeing encouraging signs in housing data such as sequential months of slowing depreciation rates, stabilizing markets and organic improvement in value trends largely in the absence of government policy intervention,” said Humphries. “However, we’re not out of the woods yet.”
The Zillow report noted the foreclosure liquidation rate has fallen steadily following the robo-signing controversy of 2010, leading banks to slow their processing of foreclosures. But it could pick up pace again soon if an expected settlement with the attorney general gives banks more certainty over the foreclosure process.
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