30% of Americans Who Sold Their Home in the Past Year Lost Money

Home values in the United States posted their seventh consecutive quarterly decline, falling 9.7% year-over-year to a Zillow Home Value Index of $202,966, according to the third quarter Zillow Real Estate Market Reports, which encompass 163 metropolitan areas.

The continued declines in value are causing more homeowners to sell their homes for less than the home’s original purchase price. Over the past 12 months, 30.2 percent of homes sold were sold for a loss, up from 23.7 percent at the end of the second quarter. In 17 markets - 14 of which are in California - more than half of homes sold in the past year were sold for a loss.

The percentage of homeowners with negative equity remained fairly steady from the second to the third quarter as more foreclosures were completed and as median down payments rose in 61 markets. One in seven (14.3 percent) of all homeowners across the country has negative equity, and of homeowners who bought in the last five years, almost one-third (29.5 percent) are underwater.

Meanwhile 27 of the 163 metropolitan statistical areas (MSAs) covered by Zillow’s reports are experiencing longer-term impact, showing negative annualized value changes over the past five years, and 12 of the markets show flat five-year annualized returns. Most affected by long-term depreciation were hard-hit areas in California’s Central Valley, like Stockton, where the five-year annualized change is -3.8 percent. Also affected are areas like Greater Boston, where the five-year annualized change is -1 percent, and the Cleveland area, where the change is -0.8 percent.

Detroit experienced the worst overall long-term depreciation, with five-year annualized change at -3.1 percent and 10-year annualized change at 0.9 percent.

Nationally, five-year annualized change for the third quarter is 3.4 percent and 10-year annualized change is 6.1 percent.

“The fact that one-quarter of markets in Zillow’s third quarter reports show negative or relatively flat annualized change over five years is an indication of the enormous amount of value that has been taken out of the real estate market through home value depreciation in the past few years,” said Dr. Stan Humphries, Zillow vice president of data and analytics. “It’s clear we are at a unique point in history; we’ve had seven consecutive quarters of decline, and we expect that to continue until at least the middle of next year. Most markets are still seeing five-year annualized returns, but we will see more markets slip into flat or negative long-term change as the economy continues to suffer, factors like job losses begin to further affect foreclosure rates and home values continue to decline.”

Source: Zillow.com

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