Might we be nearing the bottom of the housing market? Housing prices in the third quarter were essentially flat compared with the previous quarter, according to the latest zillow.com market report. Unfortunately, home prices do continue to fall, and are 4.4% lower when compared to last year.
While that doesn't seem devastating, the number of underwater mortgages remains a major problem. In fact, the percentage of single-family mortgages with negative equity rose to 28.6% fromm 26.8% in the second quarter. Negative equity has been on the rise since the robosigning controversy, says Stan Humphries, Zillow's chief economist.
"Once that erupted, and the pace of foreclosure slowed down, we saw a notch up in negative equity because essentially foreclosures are a process to clean out negative equity," he says.
Negative equity and unemployment are the biggest factors keeping the housing market depressed, Humphries tells The Daily Ticker in the accompanying video.
When is the carnage going to end? The worst may soon be over. "We're expecting about 3-5% declines before a definitive bottom, which we think would come as early as 2012," he says.
The good news for those in the market is that affordability "has never looked better." But, until the crisis of confidence ends, a low price won't be enough.