Home values in the United States extended their fall in the first quarter, with more than one in five homeowners now owing more on their mortgages than their homes are worth, real estate website Zillow.com said on Wednesday.Zillow says U.S. home prices have fallen 21.8% since the peak, while S&P/Case-Shiller says that as of Q4 2008 prices have fallen 26.7%. I don't know which source is more accurate.
U.S. home values posted a year-over-year decline of 14.2 percent to a Zillow Home Value Index of $182,378, resulting in a total 21.8 percent drop since the market peaked in 2006, according to Zillow's first-quarter Real Estate Market Reports, which encompass 161 metropolitan areas and cover the value changes in all homes, not just homes that have recently sold. ...
Declining home values left 21.9 percent of all American homeowners with negative equity by the end of the first quarter, Zillow said.
By comparison, 17.6 percent of all homeowners owed more on their mortgage than their property was worth in the fourth quarter of 2008, and 14.3 percent were underwater in the third quarter of last year, the reports showed.
Also, there's a new type of shadow inventory: people who would like to sell if the market improves.
Meanwhile, potential sellers appear to be holding back until evidence of an improved housing market. In a separate survey of homeowner sentiment, nearly one-third, or 31 percent, of homeowners said they would be at least somewhat likely to put their homes on the market in the next 12 months if they saw signs of a recovering real estate market, the reports showed. ...The typical homeowner owns his house for about seven years. When you consider the fact that the housing market has been declining for almost 3-4 years (depending on whether you look at prices or sales), it's not surprising to see a buildup of homeowners who would like to sell when the market improves.
"Unfortunately, given the magnitude of the current rates of decline, we're still many months away from a bottom even as depreciation slows," [Dr. Stan Humphries, Zillow vice president of data and analytics] said. "Moreover, the additional information we have this quarter on 'shadow inventory,' with one-third of homeowners indicating they would like to put their home on the market if conditions improve, confirms our earlier fears that a bottom in home values could be quite protracted."
"By our calculations, this could translate into as many as 20 million homes that could seep into the market as prices stabilize, maintaining a constant stream of supply that far outpaces demand, thus keeping prices flat. I'm doubtful that we'll see the bottom until 2010, and thereafter it's increasingly clear that we're likely to have a long bottom before we see meaningful recovery in home values," Humphries said.
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