Tuesday, August 11, 2009
Despite the optimism generated by some of the recent real estate market data on home sales and home prices, here comes yet another forecast to dampen that enthusiasm.
Via a Bloomberg report, Zillow makes another prediction for "underwater" homeowners.
Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb, Zillow.com said.Combine this with last week's outlook from Deutsche Bank that the tally of homeowners who owe more than their house is worth would rise to almost 50 percent by 2011 and you have two very good reasons to be cautious about any near-term real estate purchases.
Homeowners are being hurt by price declines. The estimated median value for single-family houses slid to $186,500 in the period, a 12 percent drop from a year earlier and the 10th consecutive quarterly decrease, the Seattle-based real estate data service said in a report today.
“The negative-equity rate will rise and spin off more foreclosures,” Stan Humphries, Zillow’s chief economist, said in an interview. “I see a substantial downside risk to prices and don’t think we’ll see a bottom until the middle of next year.”