U.S. Home Values Fall Farther in Third Quarter

The value of the typical American home lost still more of its value in the third quarter of this year, according to the real estate marketing site Zillow.com. The website called the latest numbers "grim news" for the nation's housing market.  

For starters, several markets that had begun to show strong signs of stabilizing earlier this year took a distinct turn for the worse. Overall home values fell 4.3 percent year-over-year and were down 1.2 percent from the previous quarter.

According to Katie Curnutte, Zillow's public relations manager, negative equity rose 23.2 percent among single-family homes with mortgages, the highest percentage since Zillow began tracking it in the first quarter of 2009.

American home values are now 25 percent below their 2006 peak, and have declined for 17 straight quarters.

Depression comparisons

"The length and severity of the current downturn is unprecedented since the Great Depression," Curnutte said.

In five California markets - Los Angeles, San Diego, San Francisco, San Jose and Ventura, home values reversed course, turning negative quarter-over-quarter after five quarters of gains.

Not surprisingly, foreclosures hit an all-time high at the end of the third quarter, with more than one out of every 1,000 homeowners losing their homes to foreclosure in September.

"Home value depreciation began to accelerate again in September, fueled by lower transactional volumes and increased inventory levels," said Zillow chief economist Stan Humphries. "Home values dropped 0.4 percent from August to September and 4.3 percent from September 2009."

Humphries said comparisons with Great Depression home value losses is not far-fetched.

"From the end of 1928 to the end of 1933, nominal home values fell 25.9 percent according to Robert Shiller's reconstruction of long-term home price appreciation in the U.S.," he said.

Shiller tracks home values with the monthly S&P Case-Shiller Home Price Index.