In the midst of relatively good news on other economic fronts, one area is worsening: home values. According to Zillow Real Estate Market Reports on Wednesday, home values fell for the 17th consecutive quarter during Q3, approaching Great Depression-era declines.
During the Depression, home prices dropped 25.9% in five years. In today’s market, prices are down 25% from their peak in June of 2006, covering four-and-a-half years. Zillow’s Home Value Index dropped 4.3% in Q3 year-over-year, and is down 1.2%, to $179,000, from Q2.
(See full index covering 25 cities at end of story.)
Coupled with that bad news, more homeowners are underwater. Nearly a quarter of single-family homeowners who have mortgages, or 23.2%, owed more on their homes in Q3 than those homes were worth. This is the highest rate of underwater mortgages since Zillow started negative equity tracking in 2009. That also is up, rising from 22.5% in Q2.
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Eleven markets tracked by Zillow had negative equity that was higher than 50%, with as many as four out of five single-family home mortgages underwater in some markets. Las Vegas and Phoenix had the highest negative equity, at 80.2% and 68.4%, respectively.
In the third quarter, home values dropped in 77% of markets covered in Zillow’s reports; even some markets that had started to see increases or that had stabilized were either flat or reentered negative territory.