As much as we were hoping to have better news to share this quarter, homes continued to lose value. In fact, home values fell at a pace we haven’t seen since 2008 — the darkest days of the housing recession.
According to Zillow’s first quarter Real Estate Market Reports, median home values, as measured by the Zillow Home Value Index, fell 3 percent during the first three months of the year. This decline was large enough to cause Zillow to push back its forecast. Previously, we anticipated a bottom in home values by the end of 2011. But with values falling by about 1 percent per month so far, it’s unlikely that will happen. We now believe a bottom will come in 2012, at the earliest.
The quickly-falling home values caused more homeowners to slip into negative equity. By the end of the first quarter, 28.4 percent of single-family homeowners with mortgages were underwater, up from 27 percent in the fourth quarter of 2010.
For more analysis of our quarterly reports, as well as an explanation of the reasons behind the declines, see Zillow Chief Economist Dr. Stan Humphries’ brief over at the Zillow Research Page.