Home values nationwide dropped 4.6 percent year-over-year in November, according to a recent Zillow report, which found its home value index back at late 2003 levels.

More than half of local markets appreciated or remained flat month-over-month in November according to Zillow Real Estate Market Reports. In the Boston area, home values dropped 2.7 percent from a year ago. The home value is at $304,000, which is a near 20 percent drop from the housing market peak.

Zillow Chief Economist Stan Humphries predicted the housing market won’t return to "normal" conditions for another three to five years.

"Overall, we are seeing encouraging signs in housing data such as sequential months of slowing depreciation rates, stabilizing markets and organic improvement in value trends, largely in the absence of government policy intervention," Humphries said. "However, we’re not out of the woods yet. Supply and demand are still not in balance in many markets and we do expect higher foreclosure liquidation rates near-term, which will put additional downward pressure on home values."

He added: "Even with the anticipated increase in foreclosures, look for 2012 to be a transitional year in which home values fall modestly followed by a prolonged period of flat home values."