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Thursday, December 9, 2010

Home Values to Drop by $1.7 Trillion in 2010

Home Values to Drop by $1.7 Trillion in 2010
2010 December 9

U.S. homes are expected to be worth $1.7 trillion less in 2010 than they were worth last year, amid rising foreclosures and the expiration of homebuyer tax credits, said Zillow.

“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,” said Stan Humphries, Zillow’s chief economist.

The drop in home values pushed more buyers underwater. In the third quarter of 2010, 23.2% of single family homeowners with mortgages owed more on their mortgage than their home was worth, up from 21.8% in 2009.

About $9 trillion in value has been lost since the market peaked in June 2006. “Despite a strong start to 2010, by the end of the year, homes lost more of their value in 2010 than they did in 2009,” said Humphries.

“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.”

“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.”

Only 24% of the 129 markets tracked by Zillow increased in total home value this year. Home values increased $10.8 billion in the Boston metropolitan statistical area, and $10.2 billion in San Diego.

The regions suffering the biggest drops in home prices include New York City, which lost $103.7 billion in value and Los Angeles, where home values fell $38.6 billion.


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