(Dow Jones) One in five housing markets entered a second leg of home-price declines in late 2009, after showing price increases for nearly half of last year, according to a report released Wednesday by Zillow.com, a real-estate Web site. ?
In 29 of the 143 markets tracked by the site--including Boston, Atlanta and San Diego--prices flattened or began to decrease again in the second part of last year, after five or more months of consecutive monthly increases, according to the site's fourth-quarter real-estate market report. ?
Home prices in another 29 markets, including Los Angeles and New York, increased each month throughout the fourth quarter. But the rate of increase slowed from November to December in 21 markets, according to the data.
Nationwide, home values fell 5% in the fourth quarter compared with the fourth quarter a year earlier. Values fell 0.5% from the third quarter of 2009.
"While we have seen strong stabilization in home values during 2009, there are clear signs that they will turn more negative in the near-term," Stan Humphries, Zillow's chief economist, said in a news release. ??"What we saw in mid-2009 was a brief respite from a larger market correction that has not yet run its course," he said.
Still, Humphries said markets that see a "double dip" in values before reaching a bottom won't see a return "to the magnitude of depreciation seen earlier." Instead, the drop will look like a "modest aftershock" of the initial drop in prices. In this scenario, a "double dip" is defined as two periods of sustained declines separated by a brief stabilization or recovery, according to the release.
The report also found the percentage of single-family homes with mortgages in negative equity rose slightly, to 21.4% in the fourth quarter, compared with 21% in the third quarter. In the second quarter, 23% were underwater. ??And homeowners who lost their homes to foreclosure reached a high in December: More than one in every thousand homes was foreclosed on that month, the highest since Zillow began recording national foreclosure data in 2000.
A home-buyer tax credit, lower interest rates and increased lending backed by the Federal Housing Administration helped fuel the recent stabilization in prices, Humphries said. ??"The remaining correction in home values we'll see in the first half of this year is a function of market fundamentals, such as the increasing flow of foreclosures, high levels of inventory in the market and a probable decrease in demand as the impact of the tax credit wanes and mortgage rates rise," he said. ?
The next few months will likely show more declines in home values in most markets, Humphries said. But he expects that, on a national basis, home prices should still hit bottom by the middle of the year. ??
"Thereafter," he said, "home values are likely to bounce along the bottom with real appreciation remaining negligible for some time."
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