By Susan A. Baird
PBN Web Editor
SEATTLE – In the first quarter, “median U.S. home values experienced the most significant year-over-year decline in 12 years, pushing values back to 2005 levels,” online real estate data publisher Zillow.com said today. “Meanwhile, one out of every two homeowners who purchased during the market peak in 2006 is now underwater on their mortgage.”
The average home value nationwide in the January through March period was $213,000, a decline of 1.6 percent compared with the fourth quarter and 7.7 percent compared with the year-ago period, Zillow found. “The median U.S. home value has not been this low since the second quarter of 2005,” the company said in a statement.
Its quarterly reports now include data for 160 metropolitan statistical areas, including Greater Providence. “First-quarter home values in the Boston area were the equivalent to levels last seen in the second quarter of 2003, down 16 percent from the peak, which occurred in the third quarter of 2005,” Zillow said.
“Values in the Los Angeles MSA have declined to 2004 levels, down 19 percent from the market high recorded in the second quarter of 2006. The Detroit area has been hardest hit, retreating to value levels of 1998, down 24 percent from the market peak in the fourth quarter of 2005.”
In the Providence-New Bedford-Fall River metro area, the average home value fell to $262,000 in the first quarter, a decline of 8.0 percent compared with the 2007 first quarter, Zillow said. And in the Worcester metro area, the average value fell 8.9 percent year-over-year $241,000. But the average value in Norwich-New London, Conn., edged up 0.2 percent compared with a year ago to $251,000.
“Not surprisingly, homeowners who purchased during a market peak are at most risk of being underwater on their mortgages,” Zillow said. Among those who bought in 2006, 51.6 percent owe more than their homes’ current value. Negative-equity rates are highest in some of the most volatile markets, such as California, Florida and Las Vegas.
“While the high rate of negative equity has little consequence to owners staying in their homes, it can be devastating to those who need to sell immediately or refinance to avoid ARM resets,” Stan Humphries, Zillow’s vice president of data and analytics, said in a statement today.
“The magnitude of annualized declines has been increasing during each of the last five quarters, which is a strong indication that home values still have further to fall, so we expect it’s going to get worse before it gets better.”
Still, although 130 of 160 metro areas saw home values fall compared with a year ago, 144 saw values rise over the past five years. For instance, the Miami-Fort Lauderdale area had an annualized appreciation rate of 7.2 percent over the past five years, despite its 18.8-percent decline compared with the 2007 first quarter.
“What’s interesting is, regardless of whether a market surged in the last few years or remained more steady, like in the South and Midwest, the rates of appreciation over the last five- and 10-year periods are positive and relatively consistent with what we typically expect to see over time,” Humphries said.
Additional information – including the full Zillow Q1 Home Value Report released today– is available at www.zillow.com.
