U.S. home values post largest quarterly decline in 2 years

by KERRI PANCHUK

Foreclosure moratoriums caused by robo-signing disputes and the expiration of home buyer tax credits led to a painful decline in home prices during the fourth quarter of 2010, with home values falling 2.6% from the previous quarter, the largest quarterly drop in nearly two years, says Zillow.com in its latest fourth-quarter Real Estate Market Report.

Zillow says a market consumed with tax credits in the early part of 2010 kept home values stabilized. But, the end of those credits caused a hangover, leading to a 5.9% drop in year-over-year fourth quarter home values and a 27% decline in home values from the market's peak in June 2006.

"While the tax credits did not hurt the housing market, they did delay its bottom by interrupting the housing correction that was taking place," said Dr. Stan Humphries, Zillow chief economist. "Home value trends in the fourth quarter remained grim, but the good news is that these declines, while painful in the short-term, mean we're getting closer to the bottom. "

In 4Q of 2010, the average U.S. home was valued at $175,200, according to Zillow's Home Value Index.

Adding more fuel to the fire, the report said 27% of single-family homeowners are underwater, owing more on their homes than they're worth.

However, Zillow says some of that negative equity will be absorbed when foreclosures pick up again in 2011, pushing underwater homeowners into foreclosure.

URL to original article: http://www.housingwire.com/2011/02/09/u-s-home-values-post-largest-quarterly-decline-in-2-years