California and Florida the highest hit in the real estate slowdown

This brings the U.S. Zindex® home value indicator to $244,000, down 2.8 percent from the second quarter. The Zindex is the median Zestimate® valuation and measures all homes in an area, not just those that have sold during the quarter.

For many homeowners who bought during the last two years when most local markets reached their peak, subsequent declines in value have left them with negative home equity, owing more than the home is currently worth. As of September 30, nearly 16 percent (15.6%) of homeowners nationwide who bought in the last year (3) and 17.5 percent of those who purchased two years ago have current home values that are less than the original mortgage amount. By comparison, less than 2 percent (1.8%) of those who purchased a home five years ago have seen their equity slide into the negative.

Not surprisingly, markets with the greatest proportion of homes with negative equity were those hit hardest by declining values. For example, people who purchased homes in California’s Central Valley, parts of Florida and Las Vegas during the past year have seen double-digit depreciation and negative equity rates reach up to five times the national median.

“The decline in home values picked up steam in the third quarter, posting the largest nationwide year-over-year drop in more than a decade,” said Stan Humphries, Zillow’s vice president of data and analytics. “Continuing depreciation coupled with the downward trend in the size of mortgage down payments has left many new home owners ‘upside down’ on their mortgage, meaning they owe more than the current value of their home” - Source: Zillow.com