U.S. Homes Set to Lose $1.7 Trillion in Value During 2010, Bringing Total Value Lost Since Market Peak to $9 Trillion
Residential Home Value Loss Since Peak Exceeds Cost of 12 Iraq Wars, According to Zillow® Real Estate Market Reports
SEATTLE, Dec. 9, 2010 /PRNewswire/ -- U.S. homes are expected to lose more than $1.7 trillion in value(1) during 2010, which is 63 percent more than the $1 trillion lost in 2009, according to analysis of recent Zillow Real Estate Market Reports(2).
That brings the total value lost since the market peaked in June 2006 to $9 trillion. By comparison, from 2001 to the end of September 2010, the war in Iraq has cost $750.8 billion, according to a September report by the Congressional Research Service(3).
The bulk of the total value lost during 2010 was in the second half of the year. From January to June, the housing market lost $680 billion. From June to December, Zillow projects residential home value losses will top $1 trillion.
Less than one-fourth (31) of the 129 markets tracked by Zillow showed gains in total home values during 2010. 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.
"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 Zillow Chief Economist Dr. Stan Humphries. "Government interventions like the homebuyer 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.
"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."
Declines in home values have led to increases in the percentage of homeowners in negative equity. At the end of 2009, 21.8 percent of single-family homeowners with mortgages were in negative equity, meaning they owed more on their mortgage than their home was worth. In the third quarter of 2010 – the last time Zillow calculated negative equity – 23.2 percent were underwater.
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(1) Total home values are calculated as the sum of all Zestimate® values for a given day. Zestimate values are estimated values of individual homes, calculated with a proprietary formula. Forecasting was used to calculate value change during December 2010.
(2) The data in Zillow's Real Estate Market Reports is aggregated from public sources by a number of data providers for 72 million homes across the country, dating back to 1996. Mortgage and home loan data is typically recorded in each county and publicly available through a county recorder's office.
(3) According to the Sept. 2, 2010 report The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11, by the Congressional Research Service, $750.8 billion was spent on the war in Iraq by the end of fiscal year 2010. http://www.fas.org/sgp/crs/natsec/RL33110.pdf
(4) Total home value change is calculated by subtracting the estimated value of all homes in an area in December 2010 from the total value at the start of 2010. Forecasting was used to calculate value change during December 2010.
(5) Total home value change is calculated by subtracting the value of all homes in an area in December 2009 from the total value at the start of 2009.
(6) The Zillow Home Value Index is the median value of all homes in an area.