I often get asked how investors can use Zillow. With a database of over 70 million homes, one of the best ways to use the site is to evaluate trends. Each quarter Zillow organizes this data and releases it at a link that can be found at the very bottom on the Zillow home page. Below I will highlight some of the national trends for the July-September 2007 data that was just released, but you can follow the link to find data for your specific area.
- National home values declined 5.7% year-over-over.
- This is the 4th consecutive quarter decline and the largest decline in more than 10 years.
- The US Zindex is $244,000, down 2.8% from the previous quarter. This is the median of all Zestimates.
For the first time since releasing these reports, we analyzed these numbers compared with mortgage information on record for the home. While we all know that real estate cycles up and down, these numbers were a little more scary to me. However, the numbers illustrate why is it always ideal to have a long term strategy when doing any this of investing.
- 15.6% of those who bought within the last year have negative equity.
- 17.5% of those who bought within the last 2 years have negative equity.
- 1.8% of those who bought within the last 5 years have negative equity.
Despite these situations where homeowners could be upside down, there is still a strong case to buy real estate as most homeowners still have positive equity in their homes. In fact, many that have purchased in the last two years have seen some sort of equity increase. This increase or decrease in equity depended on factors such as when the home was purchased, down payment amount and net market appreciation.
- Homeowners who bought within the last 2 years made a median down payment of 10% and own 13% equity share in their home.
- Homeowners who bought within the last 5 years made a median down payment of 11% and own a 41% equity share in their home, stemming from a annualized rate of 9.4% each year.
Basically these numbers prove what you as real estate professionals already know. You should encourage your clients to make smart real estate investments that are within their financial capabilities and goals. And if you are going to get into the real estate game, the best strategy is a long term one.
For detailed numbers in your area, click HERE.