U.S. home value losses stabilize in 2009: Zillow
NEW YORK - U.S. home prices stabilized in 2009 after losing trillions of dollars in value during the previous year, real estate website Zillow.com said on Wednesday.
U.S. homes lost $489 billion in value 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.
Furthermore, 48 of the 154 markets tracked by Zillow, or nearly one in three, showed gains in home values during 2009. The Boston metropolitan statistical area, or MSA, showed the largest gain, of $23.3 billion, while the Providence, Rhode Island, MSA was second, with a gain of $12.4 billion, the reports showed.
The stabilization in home values reduced rates of negative equity in the third quarter of the year. Twenty-one percent of single-family homeowners had mortgages underwater, or greater than the value of their homes, compared with 23 percent in the second quarter.
Negative equity has been one of the biggest banes of homeowners, making many unqualified for home loan refinancing and preventing some from selling.
Borrowers with negative equity are more prone to defaults and foreclosures.
Home values stabilized significantly during the second half of 2009, with the total dollar value of U.S. homes increasing since June, Stan Humphries, Zillow chief economist, said in a statement.
Most housing markets across the country had a good summer, spurred largely by the government's tax credits for home buyers, combined with very low mortgage rates, he said.
Sales have surged in recent months as buyers scrambled to take advantage of the government's first-time home buyer tax credit, which was originally set to end November 30.
Last month the Obama administration extended the $8,000 first-time home buyer tax credit, added a $6,500 credit for home owners buying a new residence and increased income limits. Eligible borrowers must sign contracts by April 30 and close loans by June 30.
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, Humphries said.
Both these factors will challenge the recent stabilization of home prices, he said.
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, the reports showed.
(Reporting by Julie Haviv; Editing by Dan Grebler)