Zillow Says Real Estate Bottom Will Come 2012, Earliest

“We now believe a bottom will come in 2012, at the earliest,” say the residential real estate prognosticators on Zillow’s blog. During the first quarter, median home values (according to the Zillow Home Value Index) dropped another three percent nationally.

In Zillow’s full quarterly report, Seattle’s ZHVI is down 11.7 percent year-over-year, with a foreclosure rate of .014 percent (and 27 percent foreclosure resales). In contrast, Portland is down 12 percent year-over-year, and has a foreclosure rate of .083 percent.

Nationally, almost 40 percent of homes sold in the first quarter sold for a loss, with the lowest price tier losing the most value. Even though employment numbers are slowly improving, “with approximately two million homes in the foreclosure process and another more than 1.5 million homes seriously delinquent,” the supply of distressed properties will continue to push depreciation.

Over on Redfin’s blog, Glenn Kelman points out that this bad news for sellers is good news for buyers who aren’t distressed themselves:

After nine months of falling prices, the next six will probably be up and down. April and early May will soften again — March new-construction contracts were dreadful, and applications for home-purchase loans just ticked down — but the summer looks strong to us. Redfin has been setting records over the past two weeks for accepted offers, with most of that business set to close in June.

Local market-watcher the Seattle Bubble also notes that usual spring bounce is here, but pooh-poohs any overheated talk of a recovery. In a late-April post, the Tim announced that “the first time since 1997, [Seattle] home prices dropped below the level of 4 percent annual gains since 1990.”