Today Zillow released their Home Value Forecast, which they claim shows a bottom in the US housing market during the first quarter. In addition, Zillow reported that for the first time in 5 years the country showed an increase in year over year housing prices and they are projecting a 1.1% increase in home prices over the next year.
Well, I wouldn't get too excited just yet. First, these numbers are all based upon Zillow's famously inaccurate Zestimates and they are looking at the median value of those estimates from all the houses that are out there as opposed to just the ones that sell. In contrast, the Case Shiller index, which gets updated next week, is based upon homes that actually sell. In my opinion that's a more accurate reflection of the current state of the market.
Also, Zillow's numbers reflect the national average. While Zillow also is claiming a market bottom for Chicago during the first quarter even their numbers still show Chicago home prices down 5.8% from last year. That's actually pretty close to what the Case Shiller index is showing and it's a long way from turning around.
As for Zillow's projections....I have no idea how they are generated or if they have any kind of historic track record so I'm not going to put a lot of stock in them. However, I will say that more and more we are hearing about evidence of a bottom in the housing market and there is more optimism about future home prices. It all seems consistent with what we are seeing in the market right now. However, reaching a bottom does not mean that the housing market is going to skyrocket any time soon. Even Zillow's "forecast" is predicting only a 1.1% increase in national home prices for the next year and they are actually predicting a 0.5% decrease in Chicago home prices.