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Home values fell sharply in 1st Quarter

[May 11, 2011.]

 

In the first quarter of 2011, home values had their biggest drop since 2008, according to real estate Website Zillow. Home values fell 3 percent from the previous quarter and 8.2 percent from a year earlier. Since June 2006, home values have plunged 29.5 percent.


Negative equity hits a high


The survey also found that more homeowners had negative equity in the first quarter. Negative equity reached a high with 28.4 percent of single-family mortgages underwater at the end of the first quarter, up from 27 percent in the previous quarter. Homeowners who are underwater owe more on their mortgage loans than their houses are worth.


Foreclosure rate grows


More homes also went into foreclosure than in the previous quarter. Foreclosures slowed at the end of last year in the wake of the "robo-signing" controversy. The foreclosure statistics combined with the other factors led Zillow to forecast that the home values probably will not reach the bottom until 2012.


"Home value declines are currently equal to those we experienced during the darkest days of the housing recession," said Zillow Chief Economist Dr. Stan Humphries in a statement. "With accelerating declines during the first quarter, it is unreasonable to expect home values to return to stability by the end of 2011."


Should you get a mortgage loan?


Although the housing market does not seem to be near its low point, you may be hesitant about buying a home. Consider three things when trying to decide whether to take the plunge and get a mortgage to purchase a house:





  1. You can't time the market. If you really want to become a homeowner, why not go ahead and take the plunge? Do your homework to understand what is happening with housing values in the area you want to buy in so you won't be surprised by a low appraisal.

  2. There are a lot of good properties out there that people are desperate to dump, so you may have more room to negotiate than your think. A lot of homeowners are willing to make major concessions to sell a home they can no longer afford.

  3. Housing prices and mortgage rates are very affordable. In fact, mortgage rates are still near historical lows, which means you'll be able to take advantage of more affordable payments than if you wait until interest rates begin rising.




If you are truly ready to become a homeowner, you can begin comparing mortgages. If you have a decent down payment saved up and good credit, you may be in a good position to take advantage of today's low home prices.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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