Biggest 1st Qtr Home Price Drop Since 2008

Zillow.com, the large real estate listing site, tracks home prices and has moved out their estimate of timing for better days. Zillow reports that home prices fell in the first quarter of 2011 at the fastest rate since late 2008. Previously Zillow had predicted some relief for home prices in 2011, but is now estimating that a recovery will not begin before sometime in 2012.
Their data shows a 3% drop in home prices in the first quarter over the previous year’s first quarter numbers. The annual year-over-year drop is 8.2%. The percentage of homeowners under water, owing more on their mortgage than their home is worth, is now approximately 28.4%, up from 27% in the fourth quarter of 2010. This represents a peak since Zillow began calculating this percentage in 2009.
Zillow covers 132 housing markets, and reports that almost all of them saw home values decline in the first quarter. The only areas moving in the other direction included:
• Fort Meyers, FL
• Champaign-Urbana, IL
• Honolulu, HI
For real estate investors, it’s a bonanza of low-priced opportunities. In fact, one of the most difficult tasks right now is to weed through short sale and foreclosure situations to locate the very best deals. The experienced investor who isn’t currently using a finder or bird dog may want to locate one who is sharp and able to dig up the best deals.
All of these areas aren’t going to turn up in harmony like the church choir. Every area will be unique. While “buying at the bottom” is a strategy we all love to use, the bottom will be elusive, and it will vary dramatically around the country. Strategies right now should revolve around either long term rental property ownership, or flipping to retail buyers or other investors. In the mid-term, the water is choppy and the outlook for appreciation within 3 to 5 years is unclear.