Author: Katie Curnutte

For the third month in a row, fewer home sellers reduced the asking price of their home than in the previous month.

As of the end of March, just over one-fifth (20.7%) of all listings on Zillow had at least one price reduction. That was a decrease from the 23.1% of listings that had a price reduction as of the end of February. Price reductions peaked last September, when nearly one-third (32.1%) of listings on Zillow had at least one price reduction.

The amount of the reductions is also falling, with the national median price reduction at 6.5% in March, compared with 6.9% in February.

As with all real estate, though, conditions vary across the country. Areas with the the biggest percentages of listings with price reductions are in the Midwest and Southwest. In the Boise metropolitan statistical area (MSA), 29.1% of listings had a price reduction as of the end of March; in the St. Louis MSA, it was 26.8%; in the Albuquerque MSA, 28.3%; and in Tucson MSA, 28%. You can see a list of the top 20 MSAs below.

The biggest price reductions, in terms of amounts, were spread out across the country. In the Detroit MSA, the median price reduction was 11.1%; in the Flint MSA, it was 10.7%; and in the Miami-Ft. Lauderdale MSA, 10.7%. See the list below for more MSAs with large reductions.

After reaching a $3 billion settlement with the attorney general of Massachusetts, Bank of America will start reducing the principal mortgage amount owed by some underwater homeowners, according to The Boston Globe.

The bank announced yesterday that the program will affect borrowers who got subprime and option adjustable-rate mortgages through Countrywide before Jan. 1, 2009. The bank will eventually expand the program to include two-year hybrid adjustable-rate mortgages, according to B of A’s Web site. Countrywide is now owned by B of A.

The bank could lower the principal amount owed by some homeowners as much as 30 percent, according to the Globe.

This particular program will help about 45,000 people who, according to The Wall Street Journal, have a loan balance that is at least 120% of the estimated home value, are at least 60 days overdue and who can prove that they can’t make payments due to financial hardship.

According to Zillow’s Real Estate Market Reports, about one in five (21%) of single-family homeowners with mortgages were in negative equity at the end of 2009 — that’s upwards of 12 million homeowners.

B of A is the biggest mortgage servicer out there, according to the Journal, and the hope is this program will pave the way for others.

Last month, we reported in our Q4 Real Estate Market Reports that five of the 143 markets we covered were in the throes of a “double dip,” meaning home values showed sustained monthly increases sometime during the year, but have been falling again, for at least five months in a row, on a month-over-month basis.

Some additional markets were on the double-dip watch list. Home values, measured by the Zillow Home Value Index, were falling after earlier increases, but the falls hadn’t yet gone on long enough to constitute a real trend.

One month later, and 12 markets have made it onto the official double-dip list. The Providence, R.I. and Boulder, Colo. metropolitan statistical areas (MSAs) are among them.

The watch list has shrunk a bit, as many markets that were on it last month sunk firmly into double dip territory after January. Ten markets, including the Boston and Denver MSAs, seem poised for a double dip. Here’s the full list:

On the other side of the coin are 16 markets that continue to show monthly increases. But for some of these, there is a caveat. Markets like the San Francisco MSA, while seeing month-over-month increases, are also seeing the rate of increase slow. If that continues, home value changes could tip back into negative territory, making some additional MSAs candidates for the double dip.

But for homeowners who live in a double-dip market, don’t lose heart. The double dip is nothing more than the continuation of an inevitable market correction. It’s not a new downturn, just the end of the one most markets have been experiencing since 2006. As Zillow Chief Economist Dr. Stan Humphries explained in his blog post last month, the bottom is in sight for most markets across the country, although we expect it will be several years before values begin to show substantial increases again.

One quick note on how we define double-dip markets: Not only do the monthly increases and decreases have to be sustained (the first downturn has to last for at least 10 of 12 months, and the upturn and subsequent downturn have to last for at least five months), they also have to total an annualized change of at least 1 percent.

Since President Obama took office last year, housing has been one of his administration’s top priorities. Programs have aimed to stem foreclosures by encouraging loan modifications and stimulate demand for housing with tax credits.

Now, the administration is taking a slightly different tack. The New York Times yesterday reported on a new program that will pay both homeowners and banks in an attempt to stimulate short sales.

Underwater homeowners who are delinquent on their mortgages appear to be the program’s target. They would receive $1,500 in “relocation assistance,” presumably when their home is sold. The bank that services their mortgage would receive $1,000 for the first mortgage, and another $1,000 if there is a second mortgage.

The Times reports the program will begin April 5.

This program seems to be the “Home Affordable Modification Program (HAMP)” that was announced late last year, according to HousingWire. Whether the name and details will remain is yet to be seen — the Treasury Department, which will run the program, doesn’t seem to have any information up on their Web site yet.

So far, the program is generating some controversy. Sources quoted in the Times were skeptical about whether it would be effective, and Daniel Indiviglio from The Atlantic wrote about his concerns today.

We’ll keep looking for more details, but in the meantime, any thoughts?

For the second month in a row, homebuyers across much of the country negotiated bigger discounts off the last listing price of homes than they had the prior month.

Buyers in the United States paid a final sale price of 2.8%, or $5,823, less than the last listing price during January, up from a median discount of 2.7% in December and 2.6% in November. December marked the first time in 11 months that buyers gained back negotiating power; for much of 2009, buyer discounts shrank as real estate markets across the country improved.

One year ago, in January 2009, buyers negotiated a median 4.5%, or $10,178 off the last listing price of homes.

The biggest discounts continued to be found in Florida, although buyers in several New York City-area metros also found relatively large discounts during January.

However, sellers continued to do well in several markets, with most buyers in places like El Centro and Stockton, Calif., paying more than the last listing price of homes sold in January.

Fewer for-sale homes experienced price reductions in January than in December, with nearly one in five (19.8%) of homes for sale on Zillow experiencing at least one price cut as of the end of January.

President Obama today announced an additional $1.5 billion in homeowner aid for the areas of the country hardest-hit by declining home values. According to Marketwatch, Florida, Michigan, Arizona, California and Nevada are the five states that will receive funds.

Speaking from Henderson, Nev., Obama spoke about the nation’s fiscal difficulties, and the many homeowners who have  been hit by unemployment and foreclosure. According to the White House, the $1.5 billion will be doled out to state housing finance agencies, who will in turn take the lead in developing programs that will be most helpful to homeowners in their states. Possible programs will assist homeowners currently in negative equity, help unemployed homeowners or address issues with second mortgages.

There aren’t a lot of details yet. The Department of the Treasury will announce the rules of the program and how much each state will receive in the next two weeks.

What’s certain is that homeowners in cities like Henderson certainly face challenges. Henderson is the second-largest city in Nevada and is part of the Las Vegas metropolitan statistical area. According to Zillow’s Real Estate Market Reports, home values in Henderson have fallen 52.5% since the market peaked in May 2006. The median home value then was $353,000. At the end of 2009, it was $167,800. The graph below of Henderson’s Zillow Home Value Index over time gives  you an idea of how home values there have changed.

As is typical in cities and towns where home values decline rapidly, many of the homeowners in and around Henderson also owe more on their mortgage than their home is worth. In the greater Las Vegas metropolitan statistical area, Zillow data shows 81.3% of all owners of single-family  homes with mortgages were underwater at the end of 2009.

The people of Henderson and Las Vegas are hardly alone in this. Below is a chart of the 20 metropolitan statistical areas tracked by Zillow where the Zillow Home Value Index has fallen the most since the individual markets peaked.

More details on these programs are sure to emerge in the coming weeks, and we’ll be sure to stay on top of them. To see how cities and towns near you have fared, check out local home values in Zillow’s Real Estate Market Reports.

For the first time in 11 months, buyers gained some negotiation power in December. Homebuyers negotiated a median 2.7 percent, or $5,618, off the last listing price of homes sold in December, up slightly from 2.6 percent or $5,538 in November. We calculate this by comparing the last listing price of individual homes and their final sale price.

That’s still far less than buyers were negotiating off the listing price at this time last year. In December 2008, they bargained a median 4.5 percent, or $10,018, off the last listing price.

Buyers in the Vero Beach, Fla. metropolitan statistical area were again most firmly in the driver’s seat and negotiated a median 8.8 percent off the last listing price.

In many markets in California, sellers continued to be in the driver’s seat, and homes often sold for more than asking price. Many of these markets were among the hardest-hit in the country by the housing downturn, and foreclosure re-sales make up more than 50 percent of all home sales in most of these.

Listing prices across the nation showed a slight increase December, with the median price of homes listed on Zillow at $209,900. That marks a 0.4 percent increase since November, but a decrease of 6.7 percent since December 2008.

Here at Zillow, we’ve assumed for a long time that, in most markets, buyers can get pretty good deals on foreclosures. Our chief economist, Dr. Stan Humphries, has called foreclosures and non-foreclosures two distinct markets — a comment that set off some debate in a previous blog post.

That debate prompted us to delve further into the issue, and today we’re releasing a white paper called “Price Differences Between Foreclosures and Non-Foreclosures.” It turns out that, in most markets, foreclosures and non-foreclosures do indeed constitute two distinct markets, with previously foreclosed homes regularly fetching much lower prices than non-foreclosed homes with similar attributes.

The extent of the “discount” for foreclosed homes varies by market.

Of the 16 markets we analyzed (using data from the end of the third quarter), the Pittsburgh metropolitan statistical area (MSA) showed the biggest discount for foreclosed homes, with buyers currently paying 59 percent less for foreclosures than they would for similar non-foreclosures.

However, there aren’t as many foreclosures to choose from in Pittsburgh as there are in some other markets. Ten percent of all sales in September were sales of previously foreclosed homes. That’s decreased even more, with 8 percent of sales in November being foreclosure re-sales.

On the other end of the spectrum was the Portland, Ore. MSA, where foreclosures typically fetched  18 percent less than non-foreclosures. Across all 16 markets, the average foreclosure discount was 28% (i.e., foreclosures sold for 72% of the price of a non-foreclosure. Here’s the full list:

A little about methodology: Our analysis attempted to control for physical differences in the homes, as well as differences in local markets that may exist between foreclosures and non-foreclosures (see the full methodology in the white paper). Without controlling for these factors, the discount for foreclosures was much larger, with foreclosures selling at a 42% discount compared to non-foreclosures.

The discount after controlling for differences between homes is probably the result of seller motivation (many sellers of foreclosed homes are banks), and the condition of the home (versus the physical specifications of the home, like number of bedrooms and bathrooms). Finally, the amount of foreclosure discount varies somewhat by how common foreclosures are in the metro area, but read the white paper for more about this relationship.

The Federal Housing Administration announced yesterday that FHA loan requirements are changing and tighter restrictions for FHA-backed loans will go into effect this year.  Colin Robertson over on Mortgages Unzipped wrote a blog post on the changes to FHA-backed loans.

The changes are relatively small for most borrowers:

• The upfront mortgage premium (MIP) will be raised from 1.75% to 2.25%.
• For borrowers with credit scores under 580, the minimum down payment will rise from 3.5% to 10%.
• Allowable seller concessions will be cut in half.

These changes are expected to be implemented this spring or summer. Read more about why the FHA made these changes.

(Photo courtesy keetsa.com/blog)

With experts across the globe spending January analyzing Obama’s performance during his first year in office, we thought we’d join in and analyze what we here at Zillow know best: His current home.

We first gave the White House a Zestimate in January 2009 as the Obama family was preparing to take residence. At that time, we estimated it was worth $308 million, based on the home’s physical attributes (132 rooms! 55,000 square feet!), historical value and housing performance in the local Washington, DC market.

Today, as President Obama prepares to mark his first anniversary in office, our estimates put White House at a bit less: $292.5 million, a drop of $15.6 million, or 5.1 percent from last January.

But it’s not all bad news for the country’s most famous home. Just like most homes across the U.S., the White House’s decline in value over the past year was not as dramatic as it was the previous year. From January 2008 to January 2009, we estimate the White House lost almost $24 million in value, or 7.2 percent.

It’s a trend that’s playing out over much of the country. According to our latest data, the November Zillow Home Value Index for the United States fell 5 percent year over year. Not great, but consider how far it fell during the previous 12 months: 11.9 percent.

In the Washington DC metro area, the Zillow Home Value Index fell 3.6 percent from November 2008 to November 2009. That showed marked stabilization from the previous year, when it fell 15.6 percent.

A few of the White House’s attributes: It has 132 rooms, 55,000 square feet, 18 acres, 16 family-guest rooms, an underground bunker, three kitchens, three elevators and 28 fireplaces. See more details on the White House or see last year’s blog post, “What is the White House Worth?”