Online real estate hub Zillow.com released some disheartening findings on home values and negative equity in the fourth quarter of 2010, including a figure of 27% of single-family homes that currently have mortgages.
Additionally, home values in the U.S. fell 2.6%, posting their greatest quarterly loss since the first quarter of 2009. Zillow’s Home Value Index’s year-over-year loss in the fourth quarter amounted to 5.9%, with the average home value at $175,200.
Zillow attributes the decline largely to government-sponsored home buyer tax credits wearing off in mid-2010, after delaying home value losses during the previous time period.
“While the tax credits did not hurt the housing market, they did delay its bottom by interrupting the housing correction that was taking place,” said Dr. Stan Humphries, Zillow chief economist. “
With more than a third of homes selling at a loss and negative equity at 27%, the overall national outlook is mediocre at best, according to the Zillow data.
“Home value trends in the fourth quarter remained grim, but the good news is that these declines, while painful in the short-term, mean we’re getting closer to the bottom. The housing recession is likely in its death throes, and we expect to see sales pick up in early 2011. That will lead the way to home values stabilizing and an eventual bottom later this year, although it will take several months of increased sales activity before values begin to respond,” said Humphries.
Of the largest 25 metropolitan statistical area covered by Zillow, Detroit (-17.4%), Miami (-15.4%) and Atlanta (-15.3%) experienced the greatest year-over-year declines in the Zillow home value index. Metro areas that suffered the smallest declines were Riverside, Calif. (+0.1%), Pittsburgh (-0.8%) and San Diego (-1.2%).
The area with the greatest negative equity was Phoenix, at nearly 70%, compared with the national average of 27%.
Written by Elizabeth Ecker