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Depending on Where You Live, a Home's Value May Affect Net Gain or Loss, According to Zillow.comĀ®

For Example: Higher valued homes in San Francisco, Washington, DC, LA doing better than average while lower valued homes in Baltimore, Chicago, Detroit outperforming all others

Mar 31, 2008

SEATTLE, March 31 /PRNewswire/ -- While declining values and compressed equity have plagued many U.S. homeowners in recent years, the value of a home relative to others locally may very well influence how much equity a home lost or gained last year, according to new analysis by real estate Web site of its Q4 Home Value Report. Zillow has broken down the U.S. housing market and 125 Metropolitan Statistical Areas (MSAs) into five value bands -- Bottom, Lower Middle, Middle, Upper Middle and Top -- each representing 20 percent of the market, to illustrate how homes of varying value performed in 2007 and over the last five years.

  Value Band Definitions and Change in Value 
                                                    1-Year        5 Year
                                                 Zindex®(2)    Annualized
  Value Band(1)              Value Range            Change     Zindex Change

  National                Zindex=$224,890           -3.0%           6.9%
  Bottom                       < $140,999           -0.7%          10.1%
  Lower Middle        $141,000 - $211,999           -5.4%           8.4%
  Middle              $212,000 - $300,499           -6.2%           7.3%
  Upper Middle        $300,500 - $460,499           -6.5%           6.6%
  Top                          > $460,500           -7.5%           5.4%


Higher valued homes saw largest drop in 2007 nationally but local picture can look quite different

Nationally, higher valued homes, representing the top 20 percent of the market, have seen values decline more significantly than lower valued homes. Homes in the Top quintile declined 7.5 percent from 2006 while Bottom quintile homes depreciated least, down less than one percent (0.7%). Over the last five years, homes in the Bottom and Lower Middle quintiles returned the most significant rates of annualized growth at 10.1 percent and 8.4 percent respectively.

Digging a bit deeper, wide variances at the local level are apparent. For example, when reviewing year-over-year value changes across value bands for 2007, Zillow found within the top 25 largest metro areas:

  * Higher valued homes outperformed lower valued homes in nearly half of
    the top MSAs
  * Lower valued homes outperformed higher valued homes in approximately 20
    percent of these markets
  * There is little or no difference across quintiles in the remaining Top
    25 regions

Sample Top MSAs where Top Quintile Performed Better than Middle Quintile:

  MSA           MSA YoY      Top       YOY             Middle          YOY
                Change     Quintile   Change          Quintile        Change

  San Francisco-
   Fremont      -6.7%    > $845,500    2.8%     $541,000 - $673,999    -6.7%
   Alexandria   -6.3%    > $524,500    2.4%     $337,500 - $412,499    -7.8%
  New York-
   Northern New
   Island       -3.5%    > $598,500   -4.1%     $383,500 - $468,999    -5.3%
  Los Angeles-
   Long Beach-
   Santa Ana   -10.6%    > $708,000   -4.1%     $485,000 - $566,999   -13.7%
   Quincy       -4.2%    > $483,000   -4.7%     $326,000 - $391,999    -8.2%
  San Diego-
   San Marcos  -10.3%    > $610,500   -5.1%     $413,000 - $486,499   -14.2%


Sample Top MSAs where Bottom Quintile Performed Better than Middle Quintile:

  MSA           MSA YoY     Bottom     YOY             Middle          YOY
                Change     Quintile   Change          Quintile        Change

   Joliet       -4.2%    < $150,499   -2.2%     $207,000 - $262,499   -6.6%
   Livonia      -8.9%     < $79,499    0.1%     $108,500 - $146,999  -12.4%
   Bellevue     -2.6%    < $221,999   -0.5%     $297,000 - $366,499   -2.8%
   Towson       -1.4%    < $137,999    8.8%     $233,000 - $297,499   -4.3%
   Beaverton    -1.0%    < $202,999    2.3%     $244,000 - $289,999   -2.9%
  Murfreesboro  0.4%     < $97,499    4.6%     $130,000 - $161,999    0.7%


"At the national level, the pattern we're seeing may be due to the fact that many higher priced homes can be found in many of the metro regions hit hardest by steep value declines, which is supported when looking deeper at the local level," said Dr. Stan Humphries, vice president of data & analytics at Zillow. "In some markets like San Francisco and New York, higher priced homes have actually performed better. This can be attributed to the fact that in many markets more expensive areas, closer to the city center, are holding value better than suburban areas further away where homes are often less expensive.

"One fairly constant finding -- regardless of geography or major movements in value -- is that owners of lower-valued homes tend to have significantly less equity than owners in higher-valued homes, driven primarily by levels of down payments," added Humphries.

Owners of Lower- to Mid-Range Homes Typically Own Less Home

As previously reported, homeowners who purchased in 2007 placed a median down payment of 10 percent and own 9 percent of their investment while 30.4 percent have negative equity. By comparison, owners in the Bottom quintile have median owner equity of 3 percent after placing a median down payment of 3.2 percent leaving 43 percent with negative equity. Owners in the Top quintile have median owner equity of more than 20 percent after placing 20 percent down and 16.9 percent have negative equity.

Owner Equity and Negative Owner equity for Homeowners who Purchased in 2007

                                      Median Down    % with        Current
                                        Payment      Negative       Owner
  Value Band(2)    Value Range          (2007)        Equity        Equity

  National      Zindex = 224,890         10.0%         30.4%         9.0%
  Bottom              < $140,999          3.2%         42.8%         3.0%
   Middle    $141,000 - $211,999          5.0%         41.9%         3.2%
  Middle     $212,000 - $300,499          5.9%         36.0%         6.2%
   Middle    $300,500 - $460,499         10.0%         27.4%        11.9%
  Top                 > $460,500         20.0%         16.9%        20.2%

   How to find out more? 

Find home equity and appreciation data across home value bands by visiting

About is an online real estate community where homeowners, buyers, sellers, and real estate agents and professionals find and share vital information about homes, for free. Launched in early 2006 with Zestimate® values and data on millions of U.S. homes, Zillow has since opened the site to community input, data and dialogue, including "Home Q&A." Zillow's goal is to help people become smarter about real estate -- what homes are worth, what's for sale, and what local experts have to say about real estate and individual homes. One of the most-visited real estate Web sites, Zillow was the only Internet company named by Advertising Age magazine to its 2006 "Marketing 50" list of the most powerful consumer brands. Zillow is headquartered in Seattle and has raised $87 million in funding., Zillow, Zestimate and Zindex are registered trademarks of Zillow, Inc.

  (1) Each value band for the U.S. and major markets represents 20 percent
      of the number of homes within each given market
  (2) The Zindex is the median home value for a given area.  Exactly half
      the home values are above the Zindex and half are below


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