Zillow Sees Home Values Still on the Slide in Q110
While home values across the US continued to fall in Q110, some markets in California may have reached a bottom, according to the latest report from online real estate marketplace Zillow. But another report from Integrated Asset Services found that national house prices actually increased 1.1% in March from April, but still remain 1.9% below year-ago levels. The Zillow Home Value Index is the median estimated valuation for houses in a particular region. Nationwide, home values dropped 3.8% from last year and 1% from the previous quarter to land at $183,700. But values in the large California markets – Los Angeles, San Diego, San Francisco, Santa Barbara and Ventura – stabilized significantly in the past year. Prices in those areas have climbed for the past 10 months after a low point in April or May 2009. While Zillow reported the possibility of another drop in the area, it is likely that prices will remain above the low last spring. “It's a very positive sign that several large markets have hit what appears to be a tentative bottom in home values," said Zillow chief economist Stan Humphries. “While this is no guarantee that home values there will not fall again, it is more likely than not that they will remain above their lowest point last year.” Humphries added, however, the homebuyer tax credit could be stealing demand from the summer rather than creating new demand. Inventory levels were rising and home values declined even with the tax credit in place in Q110, Humphries said. “Because of these factors, we believe national home values are more likely to reach bottom in the third quarter of 2010, rather than in the second quarter, as we had hoped,” Humphries said. “When we do get there, we expect the high rates of negative equity and foreclosures to keep national home value appreciation near zero for some time, possibly as long as five years.” Negative equity remained high across the country, according to the Zilow Index. More than 23% of single-family homes held underwater mortgages, up from 21.4% in Q409. Foreclosures reached a new peak in March, as one in every 1,000 homes – 0.11% – fell into foreclosure for the month. More than 32% of all homes sold in March for less than what the seller originally paid. According to CoreLogic, borrowers with negative equity declined slightly to 24% in Q110, not too far from Zillow's estimate. Underwater mortgages and borrowers with less than 5% home equity made up 28% of all residential properties. Foreclosure re-sales remained high in March as well, making up 22.2% of all home sales. These transactions dominated several metropolitan statistical areas (MSAs). In Merced, California, foreclosure re-sales accounted for 66.3% of all transactions, 63% in Madera, and 61.7% in Modesto. Write to Jon Prior.