Money Matters, Simplified.
Home prices continue to fall but at a slower rate
by Jamie Anderson - August 11, 2009 - comments
Zillow.com, a real estate valuation site, reported that 18 of the 142 declining metropolitan areas have posted at least three consecutive quarters of smaller year-over-year home value declines
New York, August 11: From bad to worse! At the end of the second quarter of the current year, close to 25 percent of mortgage holders in the nation owed more than what their homes were actually worth.
The percentage of such homes, termed as underwater mortgages, is likely to rise to 30 percent by mid-2010, given the fact that the job losses refuse to stem.
Falling prices
Data shared by Zillow.com reveals that the decline in prices has dealt a body blow to the homeowners.
The single-family houses have registered a fall of 12 percent in the estimated median value in the quarter compared to the comparative period last year.
The median price in the current quarter stood at $186,500 as U.S. home values posted their 10th successive quarterly decline.
Stan Humphries, Zillow’s chief economist, said, “The negative-equity rate will rise and spin off more foreclosures. I see a substantial downside risk to prices and don’t think we’ll see a bottom until the middle of next year.”
In fact, this Negative equity has been the chief blight for many homeowners. Such a scenario neither enables them to refinance their loans, nor allows them to sell their homes.
Values plummeted as much as 40 percent to around $106,500 in Merced, California. Centro, California, came a close second and registered a 38 percent drop to $117,400. Las Vegas filled the third slot with a 35 percent decline to $140,500.
In San Francisco and Marin counties values of homes slid more than 15 percent. "San Francisco had bucked the trend for a long time, and in metro regions the higher-end areas tend to hold their value longer. But eventually those areas succumbed to some degree to the housing recession," Humphries said.
The rising inventory of unsold homes
A whole lot of homes are lying unsold, dragging the prices down. According to the National Association of Realtors, the rate at which sales are ticking, it will take more than nine months for the 3.8 millions unsold homes to find buyers.
For the six year period 2000 to 2005, the turnover rate was 4.5 months. Thus at present, the rate has doubled.
In June, 22 percent of total U.S. home sales were on account of foreclosures. Almost a third of the homes were sold at a price that did not cover even the purchase price of the home.
"Foreclosure resales are buoying overall sales numbers, but their low prices are keeping home values down," Humphries opined.