Home Values Continue Decline

Nationwide home values in the second quarter posted the largest year-over-year decline in the past 12 years, dropping 9.9 percent from the year-ago quarter and 1.7 percent from the first quarter, to a median average of $206,919, according to the Q2 Zillow Real Estate Market Reports recently released.
The median U.S. home value has not been this low since the fourth quarter of 2004, leaving nearly one-third (29.1 percent) of homeowners who purchased since 2003 with negative equity.
One hundred forty of the 165 MSAs monitored lost value since the second quarter of 2007 and those in some of the hardest hit markets have seen more than one-third of their home values lost in the past year. Stockton, Calif. fell 38.2 percent from the year-ago quarter while the Las Vegas, Los Angeles and Miami areas have fallen 27.4 percent, 21.4 percent and 20.8 percent respectively.
The highest rates of negative equity are among those who purchased in 2006, when most markets peaked, as nearly half (45 percent) of those buyers across the U.S. now face negative equity after placing a median down payment of 10 percent. The rate is nearly double for those in the Stockton MSA where nearly every homeowner (95 percent) who bought in 2006 faces negative equity.
Nationwide, nearly one in four (23.7 percent) homes sold during the past year sold for a loss while nearly 15 percent of sales were foreclosures. In parts of California, more than 60 percent of homes sold in the past year were for a loss while homes sold in foreclosure exceeded 50 percent. In the New York- Northern New Jersey-Long Island MSA, which has the lowest rates of foreclosure among the markets monitored by Zillow, the percentage of homes sold for a loss since the second quarter 2007 is 8.8 percent and the percent of homes that sold in foreclosure is 3 percent.
In many markets, the rate of these distress signals is two to three times what was reported just a year ago, as 32.7 percent of homes sold in the second quarter were sold for a loss and 18.6 percent were foreclosure sales compared to the year-ago quarter when the rates were 12.2 percent and 7 percent respectively.
Although the significant majority of markets reported year-over-year depreciation this quarter, 148 (90 percent) returned positive annualized appreciation over the past five years and every market has shown positive appreciation over the past 10 years. For the nation, these rates are 4.4 percent and 6.5 percent respectively.

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