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Americans Lose $1.4 Trillion in Home Values in Q4; More Than was Lost in All of 2007

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.

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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%


About Zillow.com®

Zillow.com is an online real estate marketplace where homeowners, buyers, sellers, real estate agents and mortgage professionals find and share vital information about homes and mortgages, for free. Launched in early 2006 with Zestimate® home values and data on millions of U.S. homes, Zillow has since added homes for sale, a directory of real estate and lending professionals, Zillow Advice and Zillow Mortgage Marketplace. One of the most-visited U.S. real estate Web sites, with more than seven million unique visitors per month, Zillow's goal is to help people become smarter about real estate in every stage of the home ownership process--home buying, selling, remodeling and financing. The company is headquartered in Seattle and has raised $87 million in funding.

Zillow.com, Zillow, and Zestimate are registered trademarks of Zillow, Inc.

    (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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SOURCE: Zillow.com

Web site: http://www.zillow.com/


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