Welcome!




Expand Your Education with These Courses from
Becoming a Successful Sales Professional: Skills for Sales Success: Part One.
Business Creation - Prospecting: Skills for Sales Success: Part Three.
ACE: Purchase Reverse Mortgage Course.
BPOs: The Agent's Role in the Valuation Process.
Bundle 1: CIPS Core Courses (Non-US Version).

Tax Credit Hangover Continues as Home Values Drop, Negative Equity Rises in Fourth Quarter 2010

Have a comment on this article? Share on Facebook!

RISMEDIA, February 10, 2011—Home values in the United States posted their largest quarterly decline since the first quarter of 2009, falling 2.6% as the temporary stimulus of the home buyer tax credits wore off, according to Zillow’s fourth quarter Real Estate Market Reports. The Zillow Home Value Index declined 5.9% year-over-year in the fourth quarter to $175,200. Home values have fallen 27% since they peaked in June 2006.

Accelerating home value declines, as well as a slowdown in the nation’s foreclosure rate following the late-2010 robo-signing controversy, contributed to an increase in negative equity. At the end of the fourth quarter, 27% of single-family homeowners with mortgages owed more on their mortgage than their homes were worth, up from 23.2% in the third quarter.

Less than one in every 1,000 (0.09%) U.S. homes were liquidated in foreclosure in December 2010, down from 0.12% in October, when foreclosure liquidations peaked. Foreclosures are expected to increase again in early 2011, which may cause negative equity to fall as some underwater homeowners lose their homes to foreclosure and are no longer in negative equity.

With the end of the home buyer tax credits in mid-2010, home value declines accelerated toward the end of the year. When they were in effect, the credits tempered home values declines—nationally, home values fell only 0.9% from the first to the second quarter of 2010—but values resumed their decline after the credits’ expiration, falling 2.6% from the third to the fourth quarter.

“While the tax credits did not hurt the housing market, they did delay its bottom by interrupting the housing correction that was taking place,” said Dr. Stan Humphries, Zillow chief economist. “Home value trends in the fourth quarter remained grim, but the good news is that these declines, while painful in the short-term, mean we’re getting closer to the bottom. The housing recession is likely in its death throes, and we expect to see sales pick up in early 2011. That will lead the way to home values stabilizing and an eventual bottom later this year, although it will take several months of increased sales activity before values begin to respond.”

The accelerated decline in home values brought trouble for home sellers, as more were forced to sell their home for less than they purchased it. The rate of homes selling for a loss reached a new peak in December, with more than one-third (34.1%) selling for a loss. The rate of homes sold for a loss has increased steadily for the past six months.

For more information, visit www.zillow.com.

Want instant access to great articles like this for your blog or newsletter? Check out our 30-day FREE trial of REsource Licensed Real Estate Content Solutions. Need easy stay-in-touch e-Marketing solutions too? Try Pop-a-Note for 99 cents!
Join RISMedia on Twitter and Facebook to connect with us and share your thoughts on this and other topics.




Copyright© 2014 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Content on this website is copyrighted and may not be redistributed without express written permission from RISMedia. Access to RISMedia archives and thousands of articles like this, as well as consumer real estate videos, are available through RISMedia's REsource Licensed Content Solutions. Offering the industry’s most comprehensive and affordable content packages. Click here to learn more! http://resource.rismedia.com

Our Latest News >>