U.S. homes are expected to lose more than $1.7 trillion in value this year, which is 63% more than the $1 trillion lost in 2009, according to an analysis of recent Zillow Real Estate Market Reports. That brings the total value lost since the market peaked in June 2006 to $9 trillion.
The bulk of the total value lost during 2010 was in the second half of the year, Zillow says. From January to June, the housing market lost $680 billion. From June to December, Zillow projects residential home value losses will top $1 trillion.
Fewer than one-fourth of the 129 markets tracked by Zillow showed gains in total home values this year. Among those were the Boston metropolitan statistical area (MSA), which gained $10.8 billion in value, and the San Diego MSA, which gained $10.2 billion.
‘Government interventions like the home-buyer tax credit helped buoy the market during the second half of 2009 and the first half of 2010, but we saw a renewed downturn in the last half of this year,’ explains Zillow Chief Economist Dr. Stan Humphries. ‘It's a testament to the nearly irresistible force of the overall market correction that government incentives can only temporarily hold back the tide, and that the market will ultimately find its natural equilibrium of supply and demand.
‘Unfortunately, with foreclosures near an all-time high in late 2010 and high rates of negative equity persisting, it does not appear that the first part of 2011 will bring much relief,’ he adds.
Declines in home values have led to increases in the percentage of homeowners in negative equity. At the end of 2009, 21.8% of single-family homeowners with mortgages were in a negative-equity position. In the third quarter of 2010 – the last time Zillow calculated negative equity – 23.2% of homeowners were underwater.