Citing the 3% drop in home values during the first quarter of this year and the increase in foreclosures and underwater mortgages, Zillow revised its forecast earlier this week. While the organization had previously predicted that housing prices would stabilize later this year, Zillow now says that isn’t likely to happen before 2012–at the earliest.
“Home value declines are currently equal to those we experienced during the darkest days of the housing recession. With accelerating declines during the first quarter, it is unreasonable to expect home values to return to stability by the end of 2011,” said Zillow chief economist Stan Humphries in a statement. “We did expect substantial payback from the homebuyer tax credits, which buoyed the housing market last year, but underlying demand post-tax credit, as well as rising foreclosures and high negative equity rates, make it almost certain that we won’t see a bottom in home values until 2012 or later.” (Daily Finance)