Zillow: Home Values Lose Another $2 Trillion

Brian Hicks

Updated February 9, 2011


Anybody that thinks housing has reached a bottom needs to have their head examined.

If you doubt that just ask the fine folks at Beazer Homes (NYSE:BZH) who reported a loss of $48.8 million, or 66 cents a share, down more than 200% from a $48 million, or $1.17 per share, income a year earlier.

That dismal effort came on revenue that plummeted 48% to $110.3 million from $213.1 million just a year earlier.

Meanwhile the spring is really not looking that much better. Beazer reported a total of 527 home closings and 540 new orders during the period, down 43.6% and down 23.9% respectively.

Of course, that what happens Uncle Sam steps out of the mix with tax goodies and rebates—the market falls apart.

Because the truth is despite historically low interest rates, the demand for homes of all types remains at exceptionally low levels. That’s true no matter what Lawrence Yun says.

The end result is falling prices and more borrowers left underwater….

From Bloomberg by John Gittleson entitled: Home-Price Drop Leaves 27% of U.S. Owners Underwater on Loans

The number of U.S. homes worth less than their outstanding mortgage jumped in the fourth quarter as prices fell and lenders seized fewer properties from delinquent borrowers, according to Zillow Inc.

About 15.7 million homeowners had negative equity, also known as being underwater, at the end of the year, up from 13.9 million in the previous three months, the Seattle-based real estate information company said in a report today. The total represented 27 percent of mortgaged single-family homes, the highest in Zillow data dating to the first quarter of 2009.

Home prices are declining as foreclosed properties sell at discounts and unemployment at 9 percent limits buyer demand. Values will fall as much as 5 percent this year, putting more homeowners underwater, before finding a floor as the economy improves, said Stan Humphries, Zillow’s chief economist.

These seem like fairly grim numbers,” Humphries said in a telephone interview. “We’re still expecting a bottom in home values later this year. And this, if anything, makes me a bit more confident because I’m seeing very large corrections now, which means the market can start to repair itself.”

The median value for a U.S. single-family home was $175,200 in the fourth quarter, down 2.6 percent from the end of September and 5.9 percent from a year earlier, according to Zillow. Values have fallen 27 percent from the June 2006 peak.

Las Vegas led the nation in homes with negative equity, at about 81.5 percent of all properties with mortgages, Zillow said. It was followed by 69.9 percent in Phoenix; 67.9 percent in Reno, Nevada; 61.7 percent in Orlando, Florida; and 58.5 percent in Modesto, California.

The median home value in Las Vegas was $125,156 in December, the lowest since February 2000 and down 59 percent from the 2006 peak, Zillow said.

The total value of U.S. single-family homes tumbled about $798 billion in the fourth quarter, according to Zillow. For the year, values fell by more than $2 trillion to $22.3 trillion.”


Another $2 trillion right down the drain….and it is not over by a long shot.

The real fun begins when interest rates go back above 6%….

Related Articles:

Case-Shiller Index Shows Renewed Home Price Declines

2011 Housing Market Forecast

Case-Shiller Index Screams Housing Double Dip

Meredith Whitney Predicts a Housing Double-Dip

Zandi: Expect 8% Home Price Declines

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