Home values in most U.S. markets continued to decline in the first quarter of 2010, causing negative equity to inch up even higher, according to a market report released Monday by Seattle-based ""Zillow.com"":http://www.zillow.com/, an online real estate marketplace.
[IMAGE]While housing market conditions varied across the country, home values in 106 of the 135 markets tracked by Zillow continued to decline on a year-over-year basis in the first quarter of this year, causing the Zillow Home Value Index to fall 3.8 percent from the same quarter last year and 1 percent from the fourth quarter of 2009 to $183,700.
As a result, negative equity across the country remained high, with 23.3 percent of single-family homes underwater, up from 21.3 percent last quarter. In addition, Zillow said foreclosures reached a new peak in March, with more than one out of every 1,000 U.S. homes going into foreclosure during the month.
While most markets experienced continued turbulence in the first quarter, home values in several large California markets showed signs of having reached a bottom, Zillow said. According to Zillow, home values in the Los Angeles, San Diego, San Francisco, Santa Barbara, and Ventura metropolitan statistical areas have stabilized significantly in the past 10 months, after values in all five markets reached a low point in April or May of 2009.
""It's a very positive sign that several large markets have hit what appears to be a tentative bottom in home values,"" said Dr. Stan Humphries, Zillow chief economist. ""While this is no guarantee that home values there will not fall again, it is more likely than not that they will remain above their lowest point last year.""
However, Humphries said there is continued concern about other factors playing out in markets across the country. He suspects that the homebuyer tax credits, for the most part, stole demand from later this summer, rather than created new demand. Even with the tax credits in place during the first quarter, inventory levels were rising and home values continued to decline at a steady clip rather than steadying, Humphries explained.
Because of these factors, Zillow believes national home values are more likely to reach bottom in the third quarter of 2010, rather than in the second quarter as once expected. And even when the bottom is reached, high rates of negative equity and foreclosures are expected to keep national home value appreciation near zero for some time, possibly as long as five years, Humphries said.