Home Values Experience Steepest Decline Since Recession

Home values fall at record rates in first quarter of 2011.

ByLYNEKA LITTLE
May 10, 2011, 5:39 PM

May 11, 2011— -- Ten cities across the nation are experiencing double digit-declines in home values since peaking at the height of the real estate bubble.

According to a national report released earlier this week, home values decreased for the 57th consecutive month.

"Home value declines are currently equal to those we experienced during the darkest days of the housing recession," Zillow chief economist Stan Humphries said in a statement.

According to the Zillow Home Value Index, home values fell by 3 percent in the first quarter of 2011. It was the steepest quarterly decline since 2008.

"With accelerating declines during the first quarter, it is unreasonable to expect home values to return to stability by the end of 2011," Humphries said.

But the reasons are mixed, with some experts calling home values flat.

"The market is really in neutral and maybe there is a small price decline," said Christopher Thornberg, economist and co-founder of Beacon Economist. The magnitude of home value declines is nothing like 2006 to 2009, when prices fell because they "were too damn high," he said.

"If there is a decline, who cares? There are a lot of people that seem to think that if home prices don't go up that the economy is never going to heal," Thornberg said. "I got news for you, the economy is healing. If you think food prices are high and gas prices are high, why do you think high home prices are good?

"The market has hit a point of stability and it's going to stay here for a while," he said. "We have a mortgage hangover that we need to work through and only time can fix that."

Of the 132 markets covered by Zillow, only four metro areas saw a quarterly increase in home values.

"We did expect substantial payback from the homebuyer tax credits, which buoyed the housing market last year, but underlying demand post-tax credit, as well as rising foreclosures and high negative equity rates, make it almost certain that we won't see a bottom in home values until 2012 or later," Humphries said.

For our list, ABCNews asked Zillow to compile a list of 10 cities that saw the biggest decline in home values since their peak.

Here are the Top 10 Cities:

10. Melbourne, Fla.Peak Home Value: $232,732Peak Year: November 2005Recent Estimated Home Value: $100,805Decline: 56.7 percent

9. Salinas, Calif.Peak Home Value: $686,488Peak Year: November 2005Recent Estimated Home Value: $293,775Decline: 57.2 percent

8. Bakersfield, Calif.Peak Home Value: $274,500Peak Year: June 2006Recent Estimated Home Value: $116,616Decline: 57.5 percent

7. Port St. Lucie, Fla.Peak Home Value: $253,925Peak Year: March 2006Recent Estimated Home Value: $106,995 Decline: 57.9 percent

6. Vallejo, Calif.Peak Home Value: $472,819Peak Year: April 2006Recent Estimated Home Value: $194,210Decline: 58.9 percent

5. Fort Myers, Fla.Peak Home Value: $304,561Peak Year: February 2006Recent Estimated Home Value: $120,990Decline: 60.3 percent

4. Las Vegas, Nev.Peak Home Value $306,086Peak Year: May 2006Recent Estimated Home Value: $120,334Decline: 60.7 percent

3. Modesto, Calif.Peak Home Value: $364, 591Peak Year: January 2006Recent Estimated Home Value: $132,849 Decline: 63.6 percent

2. Stockton, Calif.Peak Home Value: $409,773Peak Year: March 2006Estimated Home Value: $148,231Decline: 63.8 percent

1. Merced, Calif.Peak Home Value $343,740Peak Year: December 2005Recent Estimated Home Value: $105,110Decline: 69.4 pecent

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