U.S. home values fall 3%

A foreclosure sign

UPDATED REPORT

JEREMY HOBSON:Home values fell again, last quarter by about three percent. That's according to a report out this morning from the real estate website Zillow.com.

For more on the report -- and what it says about the housing market -- let's bring in Marketplace's David Gura. He's with us live from Washington. Good morning.

DAVID GURA: Good morning Jeremy.

HOBSON: So I thought economists were talking about the housing market finally reaching a bottom this year. This report seems to indicate that's not the case.

GURA: That's right. I mean the big factor here, according to the Zillow report, is that the government had all these incentives -- big tax breaks for home buyers. And those expired last summer. And when they went away, you can just see this huge drop in sales. On top of that, it's become a lot harder to get loans. And 2 million homes are in foreclosure.

I just talked to Paul Dales, with Capital Economics.

PAUL DALES: Foreclosures just sell at a very very discounted price. And that drags the overall price in indexes down. And it also has an indirect knock and effect on other houses in the neighborhood.

And you know we have 1.5 million homeowners seriously delinquent on their mortgages. So, Jeremy this report paints a pretty grim picture.

HOBSON: A grim picture David. And is the story grim from coast to coast or are there regional differences?

GURA: You know, there's been some growth in places like Dallas and Pittsburgh, and here, in Washington, D.C. These are places where job prospects tend to be better. There are fewer foreclosures.

I talked to Mark Zandi,with Moody's Analytics. And he told me he expects things to stabilize in a year. And maybe prices will start going up two years from now.

HOBSON: Marketplace's David Gura in Washington, thanks.

GURA: Thank you.


ORIGINAL REPORT

JEREMY HOBSON: Last quarter, home values fell -- again, by about 3 percent. That's according to a report out this morning from the real estate website Zillow.com.

For more on the report -- and what it says about the housing market -- let's bring in Marketplace's David Gura. He's with us live from Washington. Good morning.

DAVID GURA: Morning Jeremy.

HOBSON: Well, we've been hearing that the housing market is still struggling, but this report seems to show things are even worse than we thought.

GURA: That's right. Zillow's painted a pretty grim picture for us here. In the U.S. today there are about 2 million homes in foreclosure -- 1.5 million homeowners seriously delinquent on paying their mortgages. And it's gotten a lot harder for Americans who want to buy real estate to get loans. And on top of that, Jeremy, the supply of homes -- the number of homes for sale in the U.S. -- far exceeds demand.

HOBSON: And David, I thought a lot of people were talking about 2011 being the year that we hit the bottom of the housing market?

GURA: Yeah, but now it looks like that might not be the case. The culprit here may be these tax incentives, these tax breaks that expired last year -- up to $8,000. In fact, when you look at this data there's this really clear turning point last summer when those went away. Sort of a steep climb in sales right up until then. Now, Jeremy economists thought that would have some effect on the housing market. But it looks like it had a much bigger effect than many of them anticipated.

HOBSON: Marketplace's David Gura in Washington with us live from Washington. Thanks David.

GURA: Thank you.

About the author

David Gura is a reporter for Marketplace, based in the Washington, D.C. bureau.

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