Home Values Drop $1.7 Trillion
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- Kirk Haverkamp | December 09, 2010
U.S. home values fell even more in 2010 than they did last year, with an expected $1.7 trillion total decline by year’s end, according to figures released today by the real estate data company Zillow.
That represents a 5 percent decline in total home values over the year, with the total market now estimated at $22.7 million. Zillow reports that home values have declined by more than $9 trillion since the peak of the housing market in 2006.
The 2010 decline is 63 percent more than the approximately $1trillion loss in home values registered in 2009. Much of that decline occurred in the second half of 2010, with values falling by $1 trillion from July to December.
"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 Stan Humphries, Zillow chief economist. "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.”
"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 added.
The big drop in home values produced a relatively modest increase in underwater homeowners, with the share of borrowers in negative equity rising to 23.2 percent of all mortgage holders in the third quarter of the year, up from 21.8 percent at the end of 2009. Negative equity refers to borrowers who owe more on their mortgages than their property is worth.
Less than one-quarter of the 129 housing markets tracked by Zillow showed price gains in 2010. Among the 20 largest home markets, California cities outperformed the nation as a whole, with San Diego showing a 2.3 percent annual gain and Los Angeles up 0.8 percent. Home values in San Francisco fell by 0.6 percent for the year, but that still outperformed most other major markets.
Major housing markets that were hit hard in the original downturn and ensuing foreclosure crisis got slammed again in 2010, with big declines in Florida, Arizona and Michigan markets. Home values in the Miami and Tampa markets were down 15.4 percent and 9.6 percent, respectively, while the Detroit metropolitan market declined another 13.9 percent for the year, while the Phoenix area posted a 13 percent decline.
Big declines were also posted in 2010 by a number of metropolitan areas that had avoided the worst of the initial downturn. Atlanta posted a whopping 14.6 percent decline in 2010, while home values in the Seattle area fell by 11.6 percent and Minneapolis-St. Paul was down by 8.8 percent.
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