Nine consecutive quarters of declines have left eight regions - including the Modesto, Calif., Stockton, Calif. and Fort Myers, Fla. regions - with median value declines of more than 50 percent since those markets peaked. In 85 of the 161 markets covered in the report, the annualized change over the past five years is negative or flat.
But in an early sign of improvement, several hard-hit markets in California, like Los Angeles, San Diego and Modesto, have seen two or more consecutive quarters of smaller year-over-year declines in home values. In total, 17 markets have seen improvement for two or more quarters in year-over-year results.
In the Los Angeles metro area, for example, the Zillow Home Value Index fell 18.9 percent year-over-year, a smaller decline than the 20.8 percent and 20.7 percent declines seen in the third and fourth quarters of 2008, respectively. In San Diego, home values fell 18 percent year-over-year, after falling 19.1 percent and 18.9 percent in the third and fourth quarters of last year. Both markets have been hard-hit by the housing downturn: L.A.'s home values have fallen 33.6 percent since the peak of the market in the first quarter of 2006, and San Diego's have fallen 35.4 percent since that market's peak in the third quarter of 2005.
Meanwhile, potential sellers appear to be holding back until evidence of an improved housing market. In a separate survey of homeowner sentiment, one-third (31 percent) of homeowners said they would be at least somewhat likely to put their homes on the market in the next 12 months if they saw signs of a recovering real estate market.
"Slowing declines in select markets are a bright spot or, at least, what passes for one given current market conditions," said Dr. Stan Humphries, Zillow vice president of data and analytics. "Unfortunately, given the magnitude of the current rates of decline, we're still many months away from a bottom even as depreciation slows. Moreover, the additional information we have this quarter on 'shadow inventory,' with one-third of homeowners indicating they would like to put their home on the market if conditions improve, confirms our earlier fears that a bottom in home values could be quite protracted. By our calculations, this could translate into as many as 20 million homes that could seep into the market as prices stabilize, maintaining a constant stream of supply that far outpaces demand, thus keeping prices flat. I'm doubtful that we'll see the bottom until 2010, and thereafter it's increasingly clear that we're likely to have a long bottom before we see meaningful recovery in home values."
In the survey, 12 percent of homeowners said they would be "very likely" to put their home on the market if there was evidence the market was turning around, while 8 percent said they would be "likely," and another 12 percent said "somewhat likely." Of the homeowners who are at least somewhat likely to put their home up for sale, 71 percent would consider increasing home sales in their neighborhoods to be evidence of a market turnaround.
In other data, foreclosures(5) and short sales(6) remained steady in the first quarter. About one in five (20.4 percent) of all transactions in the previous 12 months were foreclosures, compared to 19.9 percent the previous quarter. Short sales made up 11.9 percent of all transactions in the previous 12 months, compared to 10.9 percent in the fourth quarter.
