Second Quarter Real Estate Is Loaded With Good News/Bad News Trends

Services for Real Estate Pros with Zillow

Zillow released our quarterly trends report this week, and a lot of was good news/bad news (I guess that's better than bad news/bad news).  What I mean by this is, that there are some positive trends, but behind each of these is a potentially lurking down side. 

What makes it so hard to analyze the trends 'as is' this quarter is that you can't just extrapolate them forward since the data for June is so affected by the federal homebuyer tax credit swhich applied to home purchases under contract by the end of April. We've already seen home sales slacken significantly with the end of the tax credits, as existing homes sales in May and June were down 2.2% and 5.1% respectively, on a monthly basis. Predictably, pending sales have fallen even more, down 30% and 2.6% on a monthly basis in May and June respectively.  In a blog post, Stan Humphries who compiles all of Zillow's data asks, "Will fewer sales slow the deceleration of monthly depreciation in home values or reverse it altogether, causing home values to fall even faster?"

An example  of a good new/bad news situation has to do with what we are seeing in California. The good news- 20 of the 26 California markets tracked by Zillow have seen increased home values since last quarter and 10 have seen home value appreciation above 5%. Los Angeles home values have risen 5% since last year and San Diegohas seen 7% appreciation in home values. The potential bad news- how much of these increases are a result of the dual stimulus in California (where residents have had access to both the federal home buyer tax credits and an additional state home buyer tax credit)?  So as the stimuli expire, will these trends hold steady, continue to trend up, or subside because of the artificial demand pushed forward? 

Another good news/bad news situation has to do with negative equity.  Let's start with the good news, it's down in the second quarter to 21.5%, from 23.2% in the first quarter. The bad news is why it's down.  It seems that decline in negative equity is coming from a tremendously high foreclosure volume which is cleaning out homes in negative equity. So the rate comes down but only at the expense of lots of homeowners losing their homes.

ZHVI = Zillow Home Value Index

 I encourage you to jump over to the Zillow Blog to read the whole Q2 2010 report, as there is a lot more information there, along with more local color.  And as usual, all local data can be downloaded from our Real Estate Market Report page.

Posted by




   Thanks for reading!  Subscribe here to be alerted of blog updates. rss sara bonert blog zillow  

Want to learn how to use Zillow better?  Check out:



I'm on Twitter too! Follow me at @sbonert



Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Spencer Rascoff 08/10/2010 06:48 AM
  2. Lenn Harley 08/10/2010 07:55 AM
ActiveRain Community
The Art Of Marketing You
Zillow Discussion Group
Local Expert
Real Estate Trends
market trends
quarterly reports
local housing data

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Marty and Laurie Gale
Utah Realty - South Jordan, UT
Utah Realty | 801-205-3500 |

I have always questioned the accuracy some of the statictics on Zillow. I wonder how accurate it really is?

Aug 10, 2010 03:06 AM #1
Sara Bonert
Zillow - Atlanta, GA
Real Estate Internet Marketing

Hey Marty - Good question.  First of all, you can learn just how accurate we are here.  This chart will show you accuracies, with median err rates and percentages within sales prices, from a national down to a local county level.  

Secondly, when we look at trends, we look at all 90 million Zestimates to come up with the Zillow Home Value Index, which you can read more about here.  This is the median Zestimate valuation for a given area. Exactly half the Zestimates for a region are below this number and half the Zestimates are above it.  To use an example from that help link, suppose there are 101 homes in your county. Zillow would create a Zestimate for each of these homes. We then arrange all 101 Zestimates from lowest value to highest and, starting from the smallest value, we would pick the middle one - the 51st - and this would be the Zillow Home Value Index for your county on that particular day.

Aug 10, 2010 03:15 AM #2
Stan Humphries - Seattle, WA

Hi Marty.  Questioned individual Zestimates or our aggregate statistics?  The Zestimate is a point estimate of market value and, as such, has error associated with it.  Some people find any error disconcerting but it is the nature of an estimated product and, as Sara notes, we routinely report this error rate and always have (we also provide confidence intervals on our Zestimates but these may not be fully understood by all users). 

The aggregate statistics, on the other hand, are typically strict computations of actual data such as Homes Sold for A Loss, Foreclosure Re-Sales, or Median Listing Price.  Some statistics rely on estimated market values but the statistical properties of the Zestimate (specifically, the unbiased and symmetrical distribution of the errors) make the aggregate measure based on these individual points a reliable and accurate indicator of the prevailing trend (see this link for more details here:  Happy to hear from you if you have issues with our market metrics that you think we should investigate.



Aug 10, 2010 06:29 AM #3
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I have no quarrel with the trends published in this post.  Further, the statements about Negative Equity are spot on.


Aug 10, 2010 07:57 AM #4
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

We need the banks to step up and help us start cleaning up this mess. 

Aug 10, 2010 08:18 AM #5
Esko Kiuru
Bethesda, MD


Negative equity, or underwater, will test this housing market like no other factor. Negative equity declining because foreclosures are cleaning out bunch of that stuff is a good point.

Aug 18, 2010 03:35 PM #6
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Sara Bonert

Real Estate Internet Marketing
Ask me a question
Spam prevention

Additional Information