Real estate Web site Zillow.com released data today suggesting that the average U.S. home fell 10% in value in the past year, to $207,000. That was the largest year-over-year decline in twelve years. Homes prices are now back to 2004 levels, according to Zillow’s calculations, which are based on analysis of 165 cities.
Some other bad news in Zillow’s numbers: One in four homes sold in the past year have been sold at a loss. In some markets, such as California’s Central Valley, more than half of all home sales were foreclosures. In Washington, D.C., foreclosures represented 17% of sales. In New York, where the market remains strong, just 3% were foreclosures.
According to Zillow, nearly one-third of all Americans who bought a home since 2003 now owe more on their mortgage than their house is worth. That’s called negative equity. It’s even worse for those who bought in 2006, 45% of them are underwater.
Zillow burst on the scene in 2006 with its “Zestimates” of what people’s homes are worth. Looking up the numbers soon became a national past time and the subject of water cooler chat. Zillow’s estimates have come under criticism for their accuracy however. And now that prices are falling, will people still be interested in seeing what Zillow says their house is worth?
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.