Feb. 2013 CLOSING comments on this old post because of SPAM.
This is a Re-blog of Spencer Rascoff COO of Zilow post about their recent report of US Home Value Appreciation for the first quarter of 2009.
I have a post that will focus on Central Ohio (the value of homes in the Columbus MSA) written and ready to go.... real estate is local.
There's an interesting thread in Zillow Advice right now discussing whether we're at a bottom in the housing market. And the discussion is very timely because today Zillow released its 1st Quarter Home Value Report, detailing what is happening to home values in 161 cities. It's by far the most comprehensive report about the housing market in terms of its breadth and depth. True, individual Zestimates have their issues (more about Zestimate accuracy), but the Zillow Home Value Index is very reliable because it has enough aggregated data to wash away inaccurate Zestimates -- in other words, statistically speaking, for every Zestimate that's too low, there's another one that's equally too high, so the ZHVI is highly reliable.
So, what does the data say?
First a reminder about methodology. Zillow's reports speak to the value of almost every single home in the country, not just those that sold in the period. This is a very improtant distinction, especially in the current market environment in which less expensive homes have become a much bigger part of the market than traditionally. As a result, data that reports on median sales price (e.g., NAR's data) is very unreliable and dramatically overstates the level of decline to the typical homeowner. I previously discussed the unreliability of median sale price here.
OK, here are the highlights -- er, the lowlights, I mean:
- the USA ZHVI (the median value of almost every home in America) declined 14.2% in 1Q09 versus 1Q08, the 9th straight declining quarter
- Americans lost about $700 billion in home values in the 1st quarter alone
- 1 in 5 American homeowners (20.4 million homes) are now underwater on their mortgage
Was there any good news?
- A few markets were bright spots, including Fayettville NC (military bases) Oklahoma City (solid local economy) actually gained in value
- Some markets that have been very hard hit (e.g., Los Angeles and San Diego) are no longer increasing in the rate of decline. In other words, although home values are still declining there, they're not declining any faster than they already had been declining. So things are still bad, and getting worse, but not getting more worse. I guess that passes for "good news" nowadays.
And now for the really bad news:
- There is a massive amount of "shadow inventory" waiting to come online. Specifically, 12% of homeowners say they're "very likely" to put their home on the market if there was evidence that the market was turning around. Another 8% were "likely" and another 12% were "somewhat likely". In short, there might be another ~20 million homes waiting in the wings to come onto the market as we see signs of a recovery. When asked what "sign of recovery" they needed, 71% said "increasing home sales in my neighborhood". That's a massive amount of potential new listings, when considering our current ~4 million listings. To be fair, some of the current 4 million would have been sold before those new sellers come on the market. But the point is the same: as I said in Forbes, this is going to be an L-shaped recovery. New listings are going to come onto the market rapidly as soon as people believe we've bottomed, and the new listings will sop up what little new demand there is.
Sorry to be a party-pooper. I'm not going to spin things overly positively or overly negatively. I'm just calling it like I see it.
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