Honolulu's real estate market lost steam in the fourth quarter of 2008 and faces significantly vulnerability going forward.

However, home values outperformed the nation as a whole, according to the latest real estate market report from Zillow.com.

  The company, which released its fourth quarter 2008 report earlier this week, calculated the median value of Honolulu's combined single-family homes and condominiums at $555,199 - the second highest in the nation behind the San Jose, Calif., region.

Accelerated declines in markets outside of Honolulu bumped it up in the rankings, said Stan Humphries, Zillow vice president of data and analytics.

While Zillow reported that all Honolulu homes, including single-family and condominiums, experienced a 7.1 percent year-over-year drop in values, the 161 metro regions held up better than the nation, which fell 11.6 percent.

Zillow.com, which is an online real estate Web site that offers free information about homes and mortgages, tracked data in 161 metro regions to calculate its fourth-quarter results, Humphries said. The company's median error in calculating Honolulu values is approximately 11.6 percent.

Several markets, such as Seattle; Portland, Ore.; and Manhattan, N.Y., that had been declining at a slower rate than most of the country showed accelerated declines in the fourth quarter, he said.

According to Zillow's latest report, Americans lost $1.4 trillion in home values during the fourth quarter of 2008. That was more than the $1.3 trillion lost in all of 2007. In Honolulu specifically, homeowners lost a total of $8.9 billion in home value during the fourth quarter, pushing the total loss to $14.1 billion for the year, Zillow said.

The loss of home values in Honolulu put approximately 7.3 percent of homeowners in negative equity by the end of 2008, Zillow said. As a result, the company said that 14.2 percent of the homes sold in Honolulu last year were sold at a loss, Zillow said.

While Honolulu homeowners may bemoan the drop, Humphries said that from a national perspective the region compares favorably to California regions like San Jose, where 44 percent of homes sold for a loss; San Francisco, where 50 percent of the homes sold for a loss; and Los Angeles, where 51.7 percent of homes sold for a loss.

“;Relatively speaking, the Honolulu market has weathered the real estate downturn better than other metros,”; he said.

Honolulu's dense population and land constraints limited the housing supply during the recent boom unlike other high value markets that experienced run-ups on new construction, Humphries said

However, the extent to which the Honolulu real estate market is dependent on second-home buying and tourism may make it more vulnerable to macro economic conditions if the global recession continues for several more quarters, Humphries said.

“;People without jobs, or fearing job loss, typically don't buy homes, no matter how low prices or mortgage rates might be,”; he said.