Despite some signs of market stabilization, home values continued to fall across the country in the first quarter, according to a report by property valuation and marketing site Zillow. This is the 13th straight quarter that has seen home values drop year-over-year.

Zillow’s Home Value Index, which tracks the site’s median home-value estimates nationwide, dipped 3.8 percent from the first quarter of 2009 and 1 percent from the fourth quarter, to $183,700, the report said. About 66 percent of homes saw their value decrease nationwide.

Zillow’s chief economist, Stan Humphries, said in a statement that he suspects the federal homebuyer tax credits — which expired on April 30 — pulled home sales that would otherwise have happened over the summer forward, instead of creating new demand for homes.

"Even with the tax credits in place during the first quarter, inventory levels were rising, and home values continued to decline at a steady clip, rather than steadying," he said.

"Because of these factors, we believe national home values are more likely to reach bottom in the third quarter of 2010, rather than in the second quarter, as we had hoped. When we do get there, we expect the high rates of negative equity and foreclosures to keep national home-value appreciation near zero for some time, possibly as long as five years."

In a recent study, First American CoreLogic predicted home values would fall up to 4.2 percent within the next 12 months with the tax credit’s expiration.

Meanwhile, a survey by Prudential Real Estate and Relocation Services Inc. found that 46 percent of consumers expected real estate prices to increase during that time while only 12 percent expected prices to fall. The vast majority of consumers (78 percent) believed prices would increase over the next five years.

Home values fell in 106 of the 135 markets Zillow studied, raising levels of negative equity. In the first quarter, 23.3 percent of single-family homes were underwater (meaning borrowers owed more on their home than the property was worth). That’s up from 21.4 percent in the fourth quarter and 21.9 percent in the first quarter of 2009.

The number of homes going into foreclosure hit a new peak in March, the report said, to more than one out of every 1,000 homes (0.11 percent). Almost a third (32.4 percent) of all home sales sold for less than the seller originally paid, the report said.

Foreclosure resales made up 22.2 percent of all home sales in March, up from 20.3 percent in the fourth quarter.

In California, several metro areas saw foreclosure resales make up the majority of home sales, including Riverside (51 percent), Merced (66.3 percent), Madera (63 percent) and Modesto (61.7 percent). In nearby Las Vegas, foreclosures made up 54.9 percent of all sales.

Elsewhere in California, however, home values may have hit bottom. The Los Angeles, San Diego, San Francisco, Santa Barbara and Ventura metro areas have seen month-over-month appreciation for at least the past 10 months, the report said — each appears to have hit a low point in April or May of last year before rising.

Each of those five areas in California has seen at least a 2.6 percent value increase from March 2009. San Diego had the lowest median home price in March at $364,800, while San Francisco has the highest at $515,300.

"It’s a very positive sign that several large markets have hit what appears to be a tentative bottom in home values," Humphries said. "While this is no guarantee that home values there will not fall again, it is more likely than not that they will remain above their lowest point last year."


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