Housing Market Bottom: Still Underwater

Home prices fell faster inrnthe first quarter of this year than at any time since the worst of the housingrncrisis according to the Real Estate Market Report released byrnZillow.  </p

The Seattle firm’s Home Value Index fell torn$169,000, down 3 percent compared to the fourth quarter of 2009, the largestrnquarter-over-quarter decline since the fourth quarter of 2008, and 8.2 percentrncompared to the first quarter of 2010. rnThe company now predicts that thernmarket will not reach bottom until 2012 at the earliest.</p

Zillow’s index describes thernmedian valuation for a given geographic area on a given day and includes thernvalue of all single-family residences, condos, and cooperatives.  Data isrnaggregated from public sources by a number of data providers for 132rnMetropolitan Statistical Areas dating back to 1996. Mortgage and home loan datarnis typically recorded in each county and publicly available through a countyrnrecorder’s office.  </p

Negative equity reached arnnew high with 28.4 percent of all mortgages now underwater.  This is an increase of 1.4 percentage pointsrnsince the previous quarter due to declining home prices.  Home values have dropped 29.5 percent fromrnthe peak in June 2006.</p

Meanwhile, foreclosures resumed asrnbanks worked through the documentation and foreclosure process issues thatrncaused many of them to impose moratoriums last fall. In March one out of everyrn1,000 homes in the country was foreclosed.</p

“Home value declines arerncurrently equal to those we experienced during the darkest days of the housingrnrecession. With accelerating declines during the first quarter, it isrnunreasonable to expect home values to return to stability by the end ofrn2011,” said Zillow Chief Economist Dr. Stan Humphries. “We did expectrnsubstantial payback from the homebuyer tax credits, which buoyed the housingrnmarket last year, but underlying demand post-tax credit, as well as rising foreclosuresrnand high negative equity rates, makes it almost certain that we won’t see arnbottom in home values until 2012 or later.”</p

Very few markets were exempt fromrnhome value declines in the first quarter. The vast majority (97 percent) of thern132 markets in the study logged home value declines. Only the Fort Myers, Fla.,rnChampaign-Urbana, Ill. and Honolulu, Hawaii metropolitan statistical areasrn(MSAs) experienced quarterly increases, with home values rising 2.4 percent,rn0.8 percent and 0.3 percent, respectively. Home values in the Sarasota, Fla.rnMSA remained flat.</p<table border="1" cellpadding="3" cellspacing="0"<tbody<tr<td rowspan="2" Largestrn 25 Metropolitan Statistical
Areas Covered by Zillow </td<td colspan="4" Zillowrn Home Value Index </td