December 10, 2009
U.S. homes lost $489 billion in home values during the first 11 months of 2009, significantly less than the $3.6 trillion lost during 2008, according to analysis of recent Zillow Real Estate Market Reports. Forty-eight of the 154 markets tracked by Zillow showed gains in home values during 2009, with the Boston metropolitan statistical area (MSA) showing the largest gain of $23.3 billion. The Providence, R.I. MSA was second on the list, with a gain of $12.4 billion.
The stabilization in home values led to easing rates of negative equity in the third quarter of 2009, with 21% of all single-family homeowners with mortgages underwater, compared to 23% in the second quarter.
“Home values stabilized significantly during the second half of 2009, with the total dollar value of U.S. homes increasing since June,” said Dr. Stan Humphries, Zillow’s chief economist. “Most housing markets across the country had a good summer, spurred largely by the government’s tax credits for homebuyers combined with very low mortgage rates. Unfortunately, we believe that demand will come under downward pressure as mortgage rates creep back up after the first quarter and that housing supply will experience upward pressure as the volume of foreclosures continues to remain high. Both these factors will challenge the recent stabilization of home prices.”
The biggest home value losses, in terms of total dollars lost in 2009, were in the large MSAs of Los Angeles (down $60.8 billion), Chicago (down $49.6 billion) and New York (down $49 billion). The large overall losses were due to a combination of the high number of homes in these metro areas, along with decreases in median home values.