Larger homes and condos are taking the greatest value hits, when compared to smaller homes, as the overall decline of home values is impacting consumer spending -- a bellwether of economic health.

Nationwide, values for all homes were down 2.8 percent year-over-year during the second quarter, according to Zillow.com's U.S. Zindex home value indicator, but mid-sized homes, those from 1,200 to 1,900 square feet lost 3.1 percent of their value, on average, in the past year.

The largest homes those 1,900 square feet lost 2.8 percent of their value and the smallest homes, those with less than 1,200 square feet, typically the most affordable and now likely the most sought after, lost only 1 percent.

Condo values, victims of speculation and over building, dropped an average 5.2 percent since the second quarter last year.

Condo values in parts of Florida and California's Central Valley experienced the sharpest drops -- between 10 and 14 percent for the year ending in the second quarter 2007.

Seattle, WA-based Zillow, a popular, fast-growing real estate Web site has been criticized for its "Zestimate" valuations, despite disclaimers about the estimated values being "a starting point in determining a home's value."

Zestimates are culled from public records but Zillow encourage buyers, sellers, and homeowners to supplement Zillow's information with Comparative Market Analysis (CMA), appraisals, onsite inspection and other home value evaluations.

The Zindex home value indicator, which put the median for all homes at $251,588 in the second quarter, is the median Zestimate valuation based on 66 metros tracked.

Among 149 metros tracked by the National Association of Realtors' "Second Quarter Metro Home Prices Report," the median sale price came in at $223,800, down only 1.5 percent from the second quarter of 2006.

Zillow says the second quarter numbers in its report reveals some homes remain priced too high, comments echoed by many real estate agents in the field.

"The one ray of hope this period is that we've not seen another quarter-over-quarter decline as we've experienced for the past two quarters. The significantly poorer performance of condos and larger single-family homes suggests that prices for these housing sectors are still not in accord with current demand," said Stan Humphries, Zillow's vice president of data and analytics.

Zillow's findings are in line with Deloitte Research's "Leading Index of Consumer Spending" which reveals a decline in consumer spending caused the index to slip to 2.67 in August, down from 3.08 a month ago and 3.10 a year ago.

The index tracks consumers cash flow, based on taxes, unemployment claims, wages and housing costs, as an indicator of future consumer spending

"The housing market is beginning to have a substantial impact on consumer spending," says Carl Steidtmann, chief economist with Deloitte and author of the monthly index.

That doesn't bode well for the economy in general, but many experts continue to insist the housing market's woes won't spread beyond Main Street.

NAR President Pat V. Combs, from Grand Rapids, MI, and vice president of Coldwell Banker-AJS-Schmidt, explained in NAR's metro home price reports how most homes are holding their value. Recent declines are minuscule compared to the run up in values during the last boom -- provided the owner didn't recently purchase a home.

"Unlike stocks, where significant equity can vaporize overnight, there is little volatility in home prices, and most homeowners are experiencing very healthy long-term gains," she said.

Wall Street would beg to differ.

Steidtmann said, in a prepared statement announcing the Deloitte index, "Large amounts of housing inventory continue to exert downward pressure on home prices, creating a negative 'wealth effect' among consumers. In addition, with mortgage rates rising and refinancing money drying up, more of consumers' money is going to mortgage payments, with less left over for discretionary spending. Partially countering the housing impact, the growth in the tax burden on households has slowed, the labor market is robust and real wages continue to be strong."

In Zillow's report, the Zindex value indicator reported California and Florida were the hardest hit in terms of lowered values, while cities in the Pacific Northwest were bucking the national trend.

The most year-over-year home value depreciation was found in Sarasota-Bradenton, FL (-16.4 percent); Melbourne-Titusville-Palm Bay, FL (-14.3 percent); Stockton-Lodi, CA (-13.5 percent, the nation's foreclosure leader); Charleston-North Charleston, SC (-12.8 percent); Daytona Beach, FL (-12.5 percent) and Modesto, CA (-12.4 percent).

The highest level of appreciation was found in Grand Junction, CO (18.6 percent); Corvallis, OR (11.2 percent); Charlotte-Gastonia-Rock Hill, NC-SC (9.0 percent); Eugene-Springfield, OR (6.9 percent); Spokane, WA (6.1 percent) and Seattle-Tacoma-Bremerton, WA (5.3 percent).

Published: August 24, 2007

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.