The Zillow Real Estate Market report covering the first three months of the year shows that the market experienced its sharpest quarterly decline since 2008. Values were down 3% and have now fallen 29.5% since the peak of the market in June 2006.
There was also an increase in negative equity which reached a new high with 28.4% of all single family homes with mortgages underwater, up from 27% in the fourth quarter of 2010, due to accelerating home value declines.
The latest analysis means that the bottom in terms of property prices is now unlikely this year and Zillow has revised its forecast and now predicts a bottom in 2012 at the earliest.
The report also shows a rise in foreclosures which had fallen towards the end of 2010. But in March one out of every 1,000 homes in the country was lost to foreclosure.
‘Home value declines are currently equal to those we experienced during the darkest days of the housing recession. With accelerating declines during the first quarter, it is unreasonable to expect home values to return to stability by the end of 2011,’ said Zillow chief economist Stan Humphries.
‘We did expect substantial payback from the homebuyer tax credits, which buoyed the housing market last year, but underlying demand post tax credit, as well as rising foreclosures and high negative equity rates, make it almost certain that we won't see a bottom in home values until 2012 or later,’ he explained.
Very few markets were exempt from home value declines in the first quarter. The vast majority, some 97% of the 132 markets covered by Zillow logged home value declines. Only the Fort Myers, Florida, Champaign-Urbana, Illinois, and Honolulu, Hawaii metropolitan statistical areas (MSAs) experienced quarterly increases, with home values rising 2.45, 0.8% and 0.3%, respectively. Home values in the Sarasota, Florida, MSA remained flat.
