February Brings a Slowdown in Monthly Home Value Depreciation

National home values are still falling in February’s data but not as rapidly as in the prior month.  Monthly home value depreciation was -1.1% in February, a slight improvement from the January rate of -1.3%.  Annualized depreciation increased from -7.4% in January to -8.2% in February (see Figure 2).  The median home value nationally in February was $170,097, down 29.1% from its peak in June 2006 (see Figure 1).

Of the 132 top metropolitan regions with a Zillow Home Value Index in February, 130 metros experienced monthly declines in home values, and two markets saw monthly increases (Fort Myers, FL and Fayetteville, NC).   One hundred twenty-seven metros (96%) experienced year-over-year declines in home values, two metros saw annualized increases (Honolulu and Utica), and three metros were flat from year-ago levels.  The markets experiencing the largest annual declines in home values included Mobile, Pueblo, Ocala, Detroit, Atlanta, Flagstaff, and Spokane.  See the interactive chart below for data on all 132 metro areas plus the nation.

The rate of foreclosure liquidations notched up slightly to 0.096%, indicating that 9.6 homes out of every 10,000 were liquidated in the month (see Figure 3).  Foreclosure liquidations were 0.093% in January.  Presumably this reflects foreclosure processes that are getting back up to speed after fall and winter slowdowns attributable to “robo-signing” controversies.   We expect to see foreclosure liquidations continue to increase.

The stabilization and slight improvement in the rate of monthly home value depreciation is in line with our expectations outlined in our December market report.  We believe that we will see continuing improvement in monthly depreciation rates for the balance of the year with improvement possibly slowing or stagnating in the fall, but continuing thereafter.  At this pace, that would place a bottom in national home values in the Q4 2011 or Q1 2012 time frame.  Here, a bottom is defined as an end to consistent monthly declines in home values.