This week I received from a client via email an article that appeared in Monday’s Phoenix Business Journal entitled Zillow: Phoenix home prices decline, 68 percent underwater, and was asked “what’s your take on this?” 

My take on this: It’s an eye catching headline, and disheartening sounding news for all of us, if not down right heart-stopping.  While there are many owners underwater as a result of  the housing market crash, my opinion is that this alarming  number of under water (upside down) homes estimated by Zillow is a wild guestimate and so not even close to accurate.  In fact, this same journal published an article on the topic of Zillow’s broad claims in February of this year, entitled Local experts dispute Zillow’s housing stats ,wherein our local experts blasted Zillow and their headline/ad catching claims:  “Zillow’s reputation for accuracy is about as good as Lindsay Lohan’s reputation as a role model for good behavior,” Michael Orr of the Cromford Report.  “Even if one knew every loan balance, even a rough estimate of  the value of each house would be only a guess.  Zillow’s regression model of house values, what I assume they use, would be fairly inaccurate for most houses,” Karl Guntermann, professor of real estate at ASU.

For anyone in an upside down situation, signs of market improvement may seem too little, too late.  But we can, perhaps, take heart that there are  signals that the steady erosion has ended.  Recent trends pointing to improvement, and more meaningful than Zillow’s latest headline:

• Active MLS inventory is reducing (remember, the primary marker for an improving or worsening market  is supply versus demand).  On March 23rd, I reported that there were 31,491 active MLS residential listings in our area MLS.  At this moment, that number has decreased below 26,000 (exactly 25,799 as I type this).  The biggest inventory reduction is seen in the lower price ranges – and means fewer choices for buyers, fewer days on market until an accepted offer, and in some instances it even leads to multiple offers (on bargain properties).
• The number of residences pending sale is still increasing.  I reported 3/23/11 that total was 13,491 in our area MLS – today that number is 14,215.
• Important for continuing improvement in our market is to move away from this several- year- era of distress sales (short sales and foreclosed homes) inventory burdon, which have driven up inventory and driven down prices.  A clear signal of improvement: yesterday DS News cites Realty Trac and reports that foreclosure activity is at a 40 month low.

So, buyers waiting for the “bottom?” ~ It may be time to take the leap.