Don’t Expect the Value of Your Home To Rise Anytime Soon

Author: Mac Slavo
- May 25th, 2011
28 Comments



Bad news for homeowners and real estate investors who were expecting a recovery real estate.

Despite the trillions of dollars pumped into the economy to ‘stabilize’ prices at pre-crash bubble highs, nature continues to force a shift towards equilibrium in the real estate market:

The ailing housing market remains hampered by the backlog of distressed properties, which is growing larger as banks repossess more homes than they sell.

Banks now hold more than 872,000 homes, nearly twice as many as in 2007, the New York Times reports, citing data from RealtyTrac. In regions like Atlanta and Minneapolis, banks are seizing more homes than they’re selling, suggesting that their staffs are overwhelmed by the volume of foreclosures, the NYT notes.

As of January, the shadow inventory constituted a nine-month supply of properties, according to a March report from data-provider CoreLogic.

The fall in prices even appears to be accelerating, as home values fell 3 percent in the first three months of this year, for the biggest quarterly drop since 2008, according to a report from data-provider Zillow. Home values will continue falling through the year, and likely won’t stabilize until 2012, Zillow chief economist Stan Humphries said in a statement earlier this month.

Source: Huffpost

While Zillow claims that the real estate market will stabilize in 2012, we will continue to vehemently disagree. Zillow did, after all, predict a stabilization of the housing market in 2011 – and we can see how that forecast went.

As we’ve pointed out before, our view is that the real estate market has at least another 20% decline to go – minimum. And it could be a lot worse.

In June of 2010 we commented on the so-called “home runâ€