The news about the U.S. residential market continues to be bad. Property values have now dropped to the lowest levels since the Great Depression of the 1930s, reports Zillow.
The four-year-old, Seattle, WA-based researcher finds values have now declined for the 17th consecutive quarter with no improvement in sight.
Values in the Great Depression decreased 25.9 percent in five years. Values now are 25 percent below their 2006 peak.
U.S. home values continued to decline in the third quarter, falling 4.3 percent year-over-year, and 1.2 percent quarter-over-quarter.
With home values 25 percent below their 2006 peak and 17 consecutive quarters of declines, the length and severity of the current downturn is unprecedented since the Great Depression.
Negative equity rose to 23.2 percent of single-family homes with mortgages, the highest it has been since Zillow began tracking it in the first quarter of 2009.
In five markets, all in California - Los Angeles, San Diego, San Francisco, San Jose and Ventura - home values turned negative quarter-over-quarter after five quarters of gains.
Foreclosures reached an all-time high at the end of the third quarter, with more than one out of every 1,000 homeowners losing their homes to foreclosure in September.
"While not unexpected, the unceasing declines in home values signal that we're in for a long, bleak winter of continued troubles for the housing market," said Zillow Chief Economist Dr. Stan Humphries.
"The length and depth of the current housing recession is rivaling the Great Depression's real estate downturn, and, with encouraging signs fading, will easily eclipse it in the coming months."
Humphreys sees no immediate improvement.
"The high percentage of homeowners in negative equity continues to be troubling, in that it represents a huge number of people who are not only more vulnerable to foreclosure, but who are essentially trapped in their current homes and are prevented from selling and buying a new home," he says in the report.
This has profound implications for future demand and will be a millstone around the neck of the housing market."
The Zillow Home Value Index declined 4.3 percent year-over-year in the third quarter and 1.2 percent from the second quarter to $179,900.
Nearly one-quarter, or 23.2 percent of single-family homeowners with mortgages, were underwater on their mortgage in the third quarter, the highest it has been since Zillow began tracking negative equity in 2009. It rose from 22.5 percent in the second quarter.
In some markets, as many as four out of five single-family homeowners with mortgages were underwater on their mortgages in the third quarter.
Las Vegas had the highest percentage, with 80.2 percent in negative equity, followed by Phoenix with 68.4 percent. In total, 11 markets tracked by Zillow had negative equity above 50 percent.
Home values fell from the second to the third quarter in 77 percent of markets covered in Zillow's report.
In five of those markets - the California MSAs of Los Angeles, San Diego, San Francisco, San Jose and Ventura - home values began to fall again after five consecutive quarters of increases.
Other markets that showed signs of stabilization in previous quarters also faltered, with home values flattening or becoming negative in large MSAs like Boston and Denver.
As home values continue to fall, additional signs of trouble have emerged.
Foreclosures reached a new all-time peak, with 1.2 out of every 1,000 homeowners in the country losing their homes to foreclosure in September.
Sales of homes previously foreclosed in the past 12 months reached a near-peak level in September, with foreclosure re-sales[v] making up more than one-fifth (20.1 percent) of all sales.
The last time foreclosure re-sales reached similar levels was in March 2009, when they made up 20.5 percent of all sales.
Additionally, more than one-quarter (27.3 percent) of homes sold in September were sold for a loss, marking a near-peak level. Homes sold for a loss peaked in February 2010, with 27.7 percent.
The full national report, in its interactive format, is available at www.zillow.com/local-info on Wednesday, Nov. 10. Additionally, in most areas data is available at the state, metro, county, city, ZIP and neighborhood level.