Americans Lose $1.4 Trillion in Home Values in Q4; More Than was Lost in All of 2007
Feb 3, 2009
Eighth Consecutive Quarter of Declines is Worst So Far: Home Values Fall 11.6% in 2008; One in Six Homeowners is Underwater, According to Q4 2008 Zillow® Real Estate Market Reports
SEATTLE, Feb. 3 /PRNewswire/ -- Home values in the United States fell for the eighth consecutive quarter, declining 11.6 percent during 2008 to a Zillow Home Value Index(1) of $192,119, according to the fourth quarter Zillow Real Estate Market Reports(2), which encompass 161 metropolitan areas.
The declines mean that U.S. homeowners lost a cumulative $3.3 trillion(3) in home values during 2008, with much of that loss coming in the fourth quarter. Homeowners lost $1.4 trillion during the fourth quarter alone; more than the $1.3 trillion lost during all of 2007. Since the housing market's peak in 2006, $6.1 trillion in home values have been lost.
Foreclosures(4) made up nearly one in five (19.9 percent) of all transactions in 2008. The hard-hit Central Valley in California continued to lead the nation in foreclosures, as more than half of all sales in the Madera, Merced and Stockton metropolitan statistical areas (MSAs) were foreclosures. The New York City metro area and the Grand Junction, Colo., had the lowest rates of foreclosure in the country (both at 3.9 percent).
For the first time, Zillow has also calculated short sales(5). Across the country, 10.9 percent of all real estate transactions in 2008 were short sales. The Lincoln, Neb., MSA led the country in the rate of short sales, with 14.1 percent of all transactions. In the San Jose, Santa Rosa and Santa Cruz, Calif., MSAs, short sales made up more than 11 percent of all transactions.
As home values declined through 2008, more American homeowners have become underwater on their mortgages. At the end of the year, one in six (17.6 percent) of all homeowners had negative equity(6). This number rose from the end of the third quarter, when one in seven (14.3 percent) homeowners was underwater.
Meanwhile, several markets that had been declining at a slower rate than most of the country showed accelerated declines in the fourth quarter. The Seattle, Wash. and Portland, Ore. MSAs for the first time in the fourth quarter experienced year-over-year median home value declines (12.1 percent and 11.7 percent, respectively) that were larger than the national median. In Manhattan, which posted year-over-year gains during the first three quarters of the year, home values declined during the fourth quarter, leaving Manhattan with a year-over-year decline of 5.8 percent by the end of 2008.
"A witch's brew of economic insecurity, foreclosures and tightened lending standards are helping to keep hard-hit markets down and to widen the scope of markets showing declines in home values," said Dr. Stan Humphries, Zillow vice president of data and analytics. "As more markets turn down and markets that were already down go deeper, the pace at which value is being erased from the U.S. housing stock is rapidly increasing, with more value wiped out in the fourth quarter of 2008 than was eliminated in all of 2007. The fourth quarter is the first in which we were able to see the effects of the mounting economic insecurity that picked up steam in the fall of last year. People without jobs, or fearing job loss, typically don't buy homes, no matter how low prices or mortgage rates might be. Public policy, in terms of both job creation and efforts to stem the tide of foreclosures, will have a large influence on when some of these markets find bottom."
Despite the bad news across much of the country, 21 of 161 markets are not feeling the pinch of declining home values. Home values in the Pittsburgh MSA were flat (-0.1 percent) in 2008. In the Fayetteville, N.C. MSA, home values increased 6.9 percent in 2008. The Yakima, Wash., MSA was not far behind, with home values increasing 6.2 percent during the year. Other areas in New York State, the Midwest and the South continue to experience steady or increasing home values.
For more information, including the full national report, 161 local reports and the Q4 Zillow Homeowner Confidence Survey, visit www.zillow.com/reports/RealEstateMarketReports.htm. Highlights for select MSAs from the Zillow reports can be found below:
MSA Q4 Q4 % When % % % of All (ranked Zillow ZHVI % Change Market Fore- of Homes by Home Change from was closure(4) 2008 with population Value (YoY) Market Last at Trans- Trans- Negative size) Index Peak Current actions actions Equity (ZHVI) Level (2008) that were Short Sales United States $192,119 -11.6% -17.5% 2004-Q3 19.9% 10.9% 17.6% New York- Northern N.J. - Long Island $395,478 -6.2% -15.2% 2004-Q3 3.9% 10.3% 6.3% Modesto, CA $168,528 -33.4% -54.8% 2001-Q4 48.6% 6.7% 50.7% Stockton, CA $194,097 -31.7% -52.9% 2001-Q4 51.1% 5.4% 51.7% Las Vegas, NV $182,483 -26.8% -41.8% 2003-Q4 46.8% 7.4% 61.4% Seattle- Tacoma- Bellevue, WA $318,322 -12.1% -17.1% 2005-Q2 11.5% 11.7% 20.8% Phoenix, AZ $179,847 -22.3% -37.7 2004-Q3 41.4% 6.3% 36.4% Los Angeles, CA $410,692 -21.0% -32.0% 2003-Q4 35.9% 9.0% 20.8% Orlando, FL $172,188 -20.7% -34.7% 2004-Q3 n/a n/a 31.1%
Select MSAs with Notable Rates of YOY Depreciation, Negative Equity, Short Sales and Foreclosure Sales
Select MSAs with YOY Value Gains or Stabilization
MSA Q4 Q4 % When % % % of All (ranked Zillow ZHVI % Change Market Fore- of Homes by Home Change from was closure(4) 2008 with population Value (YoY) Market Last at Trans- Trans- Negative size) Index Peak Current actions actions Equity (ZHVI) Level (2008) that were Short Sales United States $192,119 -11.6% -17.5% 2004-Q3 19.9% 10.9% 17.6% Oklahoma City, OK $114,923 3.5% 0.0% 2008-Q3 4.9% 6.1% 5.4% Yakima, WA $134,545 6.2% 0.0% 2008-Q3 12.2% 3.5% n/a Columbia, SC $127,866 -0.8% -3.8% 2007-Q1 12.9% 6.4% 4.9% Nashville- Davidson- Murfreesboro, TN $162,226 -2.6% -5.2% 2007-Q4 13.3% 7.3% 13.4% Lincoln, NE $135,383 -0.5% -7.2% 2007-Q1 8.7% 14.1% 11.1% Columbus, OH $139,594 -3.5% -8.0% 2004-Q1 22.5% 10.6% 19.6% Winston- Salem, NC $131,495 -1.2% -5.4% 2007-Q4 16.2% 7.8% 13.2%
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(1) The Zillow Home Value Index is the median Zestimate valuation for a given geographic area on a given day and includes the value of all single -family residences, condominiums and cooperatives, regardless of whether they sold within a given period. The Home Value Index at the national and MSA levels is calculated using a weighted average of the median home value for each county. It is expressed in dollars and is for a particular geographic region. (2) The data in Zillow's Real Estate Market Reports is aggregated from public sources by a number of data providers for 161 Metropolitan Statistical Areas dating back to 1996. Mortgage and home loan data is typically recorded in each county and publicly available through a county recorder's office. (3) Total value lost is calculated by adding all Zestimates in an area at two different points in time(i.e. peak of market, Q4 2007 and Q4 2008) and calculating the difference. (4) Foreclosures is a legal process by which a bank or lender sells or repossesses a mortgaged property because the borrower does not meet the requirements of the loan, typically by missing payments. Zillow identifies foreclosures by a Trustee's Deed of Sale, which is the transfer from the owner to a lender or a private party (5) A short sale is a sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes. To calculate short sales, Zillow looks at all properties that have loans and counts the number that were sold for less than the loan amount. We then exclude foreclosures and divide that number by the number of all transactions in an area to come up with the percent of all transactions that are short sales. Because there is little public records data regarding short sales, these could include instances when the homeowner sells their home for less than they owe on their mortgage and elect to pay the difference themselves. (6) Negative equity indicates that the current home value as of Dec. 31, 2008 is less than the original mortgage amount. To be conservative, principal payments and equity withdrawals since initial loan origination have been excluded from the analysis, which is consistent with standard reporting practices.
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