Local home values plunge faster than national rate

A national report says the trend will continue for another year before the market hits bottom.

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By Tim Tresslar, Staff Writer Updated 7:29 AM Tuesday, May 10, 2011

Local home values are plunging deeper than they are nationwide, and 30 percent of local mortgage holders owe more than their homes are worth, a real estate data firm said Monday.

Seattle-based Zillow also said it will be 2012 at the earliest before home values hit bottom.

“Home value declines are currently equal to those we experienced during the darkest days of the recession,” said Stan Humphries, the company’s chief economist.

The values of single-family homes in the Dayton metropolitan area fell 10.2 percent to $93,300 in the first quarter. Meanwhile, the number of properties where the owner owes more than the house is worth increased to 30.5 percent from 22.7 percent during same period last year. Zillow said.

Other major cities in Ohio reported similar declines during the quarter.

Since June 2006, when home values peaked in the region made up of Greene, Miami, Montgomery and Preble counties, they have fallen 21.1 percent, the company said.

Nationally, Zillow’s Home Price Index fell to $169,00, an 8.2 percent decline from a year ago, the company said, and the share of homes with negative equity reached 28.4 percent compared to the same period last year.

Local housing prices are declining for the same reasons prices are declining nationally, said a finance expert who expects prices to drop for several more years. The market has too large a supply of homes due to foreclosures, said David Marshall, assistant professor of finance at Miami University.

He expects more foreclosures to enter the marketplace later this year because of resetting. Resetting is related to adjustable rate mortgages, which often have a teaser or discount rate for the first three years of the loan, Marshall said. Many mortgage loans are resetting this year, which means their interest rates will be recalculated higher.

“Combining this with a still high unemployment rate, as more of these borrowers can’t afford their new higher mortgage payments, there will be more foreclosures entering the marketplace. I would not be surprised to see housing prices continue to drop for several more years,” Marshall said in an email.

The number of homes sold during the first quarter in the Dayton area was 2,030, compared with 2,140 during the year-ago period, according to the Dayton Area Board of Realtors.

The average sale price for the period was $101,877, compared with $117,062 a year earlier, a 12.5 percent decline. The board only tracks homes sold through the multiple listings service and its numbers are not directly comparable to Zillow’s figures.

Bob Wilson, the DABR’s president, said sales of foreclosed home rose in the first quarter, which puts pressure on prices, but more recently he has seen the market firm up.

“I’m not seeing a great movement in prices,” he said.

Staff Writer Chelsey Levingston contributed to this report.

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