24 Percent of U.S. Homes Underwater

24 Percent of U.S. Homes Underwater

The number of residential properties nationwide with mortgages that were "underwater" at the end of 2009 rose by 3 million over year-end 2008, according to a First American CoreLogic report released Feb. 23. An additional 620,000 properties fell into negative equity in the fourth quarter alone, bringing to 11.3 million (or 24 percent) the 2009 total. That marks an uptick from the 23 percent represented by the 10.7 million underwater mortgages at the end of the third quarter, according to MSN Money.

Overall, the problem loans remain concentrated in five states: Nevada, with 70 percent of home mortgages underwater; followed by Arizona, with 51 percent underwater; Florida at 48 percent; Michigan at 39 percent; and California at 35 percent. Those states were in stark contrast with the lowest three: Iowa with 9 percent of home mortgages, New York with 6.3 percent and Oklahoma with 6 percent, according to MSN Money.

California (2.4 million) and Florida (2.2 million) have the largest number of negative equity mortgages, accounting for 41 percent of all negative equity loans, according to MSN Money.

Despite bleak findings in the First American CoreLogic report, a Standard & Poor's/Case-Shiller report released Feb. 23 showed that home prices increased modestly in December. The Standard & Poor's/Case-Shiller index of home prices in 20 metropolitan areas rose 0.3 percent in December, the index's seventh consecutive monthly increase, MSN Money reported.

Zillow Values No More Accurate Than Homeowners' Estimates: The Appraisal Journal

CHICAGO (Feb. 25, 2010)- Estimates of home values from Zillow.com may be no more accurate than homeowners' estimates of value, according to a new study in The Appraisal Journal's Winter 2010 issue.
The Appraisal Journal is the quarterly technical and academic publication of the Appraisal Institute, the nation's largest association of real estate appraisers. (The materials presented in the publication represent the opinions and views of the authors.)

"Zillow's Estimates of Single-Family Housing Values," by Daniel R. Hollas, Ph.D., Ronald C. Rutherford, Ph.D., and Thomas A. Thomson, Ph.D., examines how Zillow's estimates of value, known as Zestimates, compare to actual sale prices. Zillow.com is an automated valuation model Web site.

The authors looked at home sales in Arlington, Texas, a location where Zillow has indicated its data has the highest accuracy level. The authors' study found that 40 percent of the homes in the sample were overvalued by Zillow by more than 10 percent compared to actual sale prices. The study's authors suggested that Zillow may not take into account the occupancy of properties, which has been shown to affect sale prices.

Other studies have shown that on average homeowners' overestimate the values of their homes by 5.1 percent and new owners overvalue their homes by about 8.4 percent. The authors conclude, therefore, that while Zillow is a helpful tool, it may not be more accurate than the owners' own estimates of value.