Unlike Clear Capital’s relatively rosy picture of a recovering housing market, Zillow is considerably more pessimistic. Zillow’s data is not as fresh as that of Clear Capital. The housing data it reports go only through December 2009. The last two months of the calendar year did see a considerable drop in home sales and a dip in home values that is reflected more negatively in Zillow’s report than in the one we covered earlier from Clear Capital. In these uncertain times, however, it pays to take all trend data with a grain of salt and then to pay attention in detail to what is happening locally within your own market.
As of the 4th quarter of 2009 things looked pretty grim in a number of markets, according to Zillow figures. Home values declined 5% nationwide between the 4th quarter of 2009 and the 4th quarter of 2008. In 29 of 143 markets in the Zillow survey had flat or decreasing home values after 5 months of increases during 2009. Zillow defines double-dip markets as those with decreasing values of 1% or more for 5 consecutive months or more, followed by a similar increase, followed by another decrease.
Zillow sees that double-dip pattern in several markets: Augusta, GA, Greeley, OH, Harrisburg, PA, Lancaster, PA, and Oklahoma City. Some of the major cities Clear Capital saw on the recovery list, Zillow anticipates will fall into a double-dip of price declines, including Atlanta and San Jose. Other major cities Zillow believes is in danger of a double-dip of price troubles are San Diego, Boston and Denver.
Zillow does not expect the second downturn to be as severe or to last as long. It will merely correct some price over-valuation that went on during a five month period in mid-2009.
One reason Stan Humphries, Zillow’s Chief Economist, is still bearish on home valuation is that foreclosures remain at an all-time high. Of all U.S. home sales in the 4th quarter of 2009 20.3% were foreclosed homes. In Las Vegas, and several California cities, foreclosures were the majority of home sales in the 4th quarter.
Not all the home price news was bad, according to Zillow. In 27 of the 143 markets surveyed home prices appreciated year-over-year in the 4th quarter, and in 15 markets home prices stayed steady.
The percentage of U.S. homes with negative equity rose in the 4th quarter to 21.4%. In some communities sellers settled for 23-28% less than they paid originally for their home when the home was resold in the 4th quarter of 2009.
It will be interesting to see whether Zillow’s trend information gets rosier when it reports on the 1st quarter of 2010. If it is using the same playbook as Clear Capital, the news should get better.
Dave Rosenmarkle
Broker/Owner
Highland Realty
Arlington, VA 22207
703-538-2566
davidrose@mris.com
www.HighlandAgents.com
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