When will housing climb out of the recession?

Foreclosure sign

STEVE CHIOTAKIS: A survey out today says the nation's housing market is still in the tank. Real estate website Zillow.com reports home values just keep on falling -- down between the last quarter of 2010 and the first quarter of this year. And all told, down for 57 months straight.

Stan Humphries is chief economist with Zillow.com and he's with us to talk about the results of this new report. Good morning Stan.

STAN HUMPHRIES: Hi Steve. How are you?

CHIOTAKIS: Doing well. Break down some of the numbers for us. How did they look?

HUMPHRIES: In terms of the overall housing market nationally, home values fell 3 percent in the first quarter alone which our previous forecast for home value declines in 2011 was that home values would decline 5 to 7 percent. So losing 3 percent in the first three months is not a great way to start out the year. And actually that had led us now to revise our expectations for home value declines in 2011 -- up to 7 to 9 percent for the calendar year.

CHIOTAKIS: We had this first time home buyers tax credit of $8000 -- I remember that. It ended last summer. How has the ending of that program played into these numbers?

HUMPHRIES: Well, it had a probably pretty large impact, particularly in the latter half of 2010 where the tax credit was essentially shifting demand around within a year. So, essentially stealing demand from future months into the nearer months. And once that tax credit came off, there was a pay back pretty commiserate with the actual boosting in sales that we saw during the time when the tax credit was in effect.

CHIOTAKIS: I noticed there are some cities in California where home prices have appreciated -- have gotten better. What's going on there?

HUMPHRIES: Yeah. I mean there were actually about five markets -- mostly in Southern California that saw pretty positive trends in 2009-2010. Those markets included L.A., San Francisco, San Jose, San Diego and Ventura metros. But that again, slipped away in the third quarter of last year once the tax credits came off.

CHIOTAKIS: Do you think, Stan, government intervention will help bring demand back?

HUMPHRIES: No. I think at this point the the markets getting back to a normal equilibrium on their own -- of supply and demand -- is what we need. I think the lessons of the tax credit are that we can be quite successful moving demand within the year, but we are less successful in changing the overall trajectory of where home prices are going to go.

CHIOTAKIS: Any hope do you think on the horizon?

HUMPHRIES: Well, I think if there's any hope, we do have a modestly improving picture on the employment front. So improving employment is going to help the housing market because people who are feeling more secure in their jobs and improving consumer confidence is going to help get people off the fence and help people feel better about the housing market.

CHIOTAKIS: Stan Humphries, chief economist with Zillow.com. Stan thanks.

HUMPHRIES: Thank you Steve.

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