Home Value Losses Stabilizing

According to analysis of recent Zillow Real Estate Market Reports, U.S. homes lost $489 billion in value during the first 11 months of 2009, significantly less than the $3.6 trillion lost during 2008. Furthermore, 48 of the 154 markets tracked by Zillow, or nearly one in three, showed gains in home values during 2009.

The stabilization in home values reduced rates of negative equity in the third quarter of the year. Twenty-one percent of single-family homeowners had mortgages underwater, or greater than the value of their homes, compared with 23 percent in the second quarter.

Negative equity has been one of the biggest banes of homeowners, making many unqualified for home loan refinancing and preventing some from selling. Borrowers with negative equity are more prone to defaults and foreclosures.

Sales have surged in recent months as buyers scrambled to take advantage of the government's first-time home buyer tax credit, which was originally set to end November 30. Last month the Obama administration extended the $8,000 first-time home buyer tax credit, added a $6,500 credit for home owners buying a new residence and increased income limits. Eligible borrowers must sign contracts by April 30 and close loans by June 30.