Home values in the United States continued to decline in the second quarter of 2010, with the Zillow Home Value Index falling 3.2 percent year-over-year and 0.6 percent from the first quarter to $182,500. The national rate of decline decelerated from the first quarter, marking the second consecutive quarter of slowing declines, and negative equity fell to 21.5 percent, according to the second quarter Zillow Real Estate Market Reports.
Negative equity, which refers to the percentage of single-family homeowners with mortgages who are underwater, fell from 23.3 percent in the first quarter, and from 23 percent one year ago.
Conditions varied among individual markets across the country. In California, where both federal and state tax credits are available to some homebuyers, more than a quarter (27.8 percent) of markets tracked by Zillow saw increases in home values in the past year. Home values in five California markets have increased for the past five quarters, and four of those have increased by more than 5 percent since the second quarter of 2009. The Zillow Home Value Index was up 7.3 percent year-over-year in the San Diego metropolitan statistical area (MSA); up 5.9 percent in the San Francisco MSA; up 5.6 percent in the San Jose MSA; and up 5.5 percent in the Los Angeles MSA.
Meanwhile, home values in Florida and Arizona continued to show dramatic declines, with home values in the Miami-Fort Lauderdale MSA falling 15.2 percent year-over-year and home values in the Phoenix MSA falling 11.8 percent.
"As the national housing market limps toward stabilization, individual markets are a mixed bag," said Zillow Chief Economist Dr. Stan Humphries. "The double tax credits for some California homebuyers have certainly stimulated housing demand there and are partly responsible for the rapid—and likely unsustainable—rates of appreciation in many markets across the state. While there is some uncertainty about how home values will respond in those markets once all incentives are removed, it's certain they can't continue at their current rates of appreciation, but is unlikely they will re-test the low points reached in 2009. Markets in other parts of the country, like Miami and Phoenix, are not yet showing signs of reaching a bottom in home values. High supply continues to be a challenge in states like Florida and Arizona."
Foreclosures again reached a new peak in June, with more than one out of every 1,000 (0.11 percent) U.S. homes being foreclosed upon during the month. Foreclosure re-sales fell in June, making up 16.9 percent of all U.S. home sales during the month, down from a 2010 high of 19.8 percent in February. Foreclosure re-sales continued to be high in most markets hit hardest by value declines. For example, they made up 55.8 percent of June sales in the El Centro, Calif. MSA, 54.6 percent in the Madera, Calif. MSA and 53.6 percent in the Merced, Calif. MSA. Additionally, more than one-fourth (26 percent) of home sales nationwide sold for less than what the seller originally paid.
"Nationally, home values are moving in the right direction as rates of decline continue to slow," said Dr. Humphries. "There is a large unknown on the horizon, however, as these second quarter numbers are still heavily influenced by the federal homebuyer tax credits, which were available for homes under contract by the end of April. Home sales are declining significantly in the post-tax credits environment, but the impact of falling home sales on already-declining home values is yet to be seen. Recent trends in home values suggest the nation could reach a bottom in the latter half of 2010, but we continue to be cautious about the impact of declining home sales."
The full national report, in its interactive format, is available at www.zillow.com/local-info. Additionally, in most areas data is available at the state, metro, county, city, ZIP and neighborhood level.
For more information, visit www.zillow.com.