One in Three Homes Sold For a Loss Last Year: Report
Falling home values led one in three American sellers to accept an offer for less than the original purchase price during the past 12 months, according to data released Wednesday by Zillow.com. The online real estate community published its third-quarter market report, which studies 163 metropolitan areas and showed the seventh consecutive quarterly decline in home value — a 9.7 percent year-over-year decline to a home value index of $202,966. During the past 12-month period, 30.2 percent of homes sold at a loss to the owner, up from 23.7 percent at the end of the second quarter. More than half of the homes sold in 17 metropolitan markets — 14 of which are in California — sold for a loss. One in seven — or 14.3 percent — of homeowners has negative equity and one-third — or 29.5 percent — of homeowners who bought in the last five years is now underwater, according to the report. Of the metropolitan statistical areas (MSAs) covered in the report, 27 are experiencing long-term impact and showed negative annualized value changes over the past five years; 12 markets show flat five-year annualized returns. The five-year annualized change in Stockton, Calif. came in at -3.8 percent, Greater Boston came in at -1.0 percent and Cleveland came in at -0.8 percent. Detroit experienced the worst long-term depreciation of -3.1 percent during the last five years and 0.9 percent for the last 10 years. "It's clear we are at a unique point in history; we've had seven consecutive quarters of decline, and we expect that to continue until at least the middle of next year," Stan Humphries, vice president of data and analytics, said in a media statement. "Most markets are still seeing five-year annualized returns, but we will see more markets slip into flat or negative long-term change as the economy continues to suffer, factors like job losses begin to further affect foreclosure rates and home values continue to decline." Foreclosure sales made up 18.6 percent of all transactions in the last 12 months, according to Zillow's data. California's Central Valley experienced foreclosures in 57.6 percent of transactions. Foreclosures made up 56.4 percent of all transactions in Stockton; they accounted for only 3.5 percent of all transactions in the New York metro area. Not surprisingly, areas with the highest foreclosure rates are also the markets with some of the greatest home value declines, according to the report. Twelve markets showed positive year-over-year home value change of more than 1 percent — concentrated mainly in the Carolinas and upstate New York — showing perhaps a glimmer of hope in some heavily populated areas. However, while 49 percent of all homeowners surveyed for the third quarter homeowner confidence report — released in late October — said they believed their home's value either increased or stayed the same during the last year, Zillow's data showed 74 percent of all homes actually lost value. The sweeping declines in home values contributed to the overall loss to home sellers, but nearly half of homeowners don't acknowledge the issue. “We’re seeing a fascinating distinction in consumer psychology — on the one hand, homeowners appear to understand the reality of today’s economy and are curbing their household spending, but on the other hand they still aren’t ready to admit that these woes might extend to their own homes,” Humpries said in an October media statement. “There’s clearly still some denial.” Write to Diana Golobay at email@example.com.