Homes in the US have lost trillions of dollars in value during 2008, with nearly 11.7 million American households now owing more on their mortgage than their homes are worth, real estate website Zillow.com said on Monday.
US homes are set to lose well over $2 trillion in value during 2008, according to an analysis of recent Zillow Real Estate Market Reports. Home values declined 8.4 per cent year-on-year during the first three quarters of this year, compared to the same period in 2007, the reports showed.
US home values lost $1.9 trillion from the first of the year through the end of the third quarter, and will probably fall further in the fourth quarter. One in seven of all homeowners, or 14.3 per cent, were “underwater” by the end of the third quarter, the reports showed. “This year marked the acceleration of the market correction, and is likely to end with the eighth consecutive quarter of declines in home values,” Stan Humphries, vice president, data and analytics, Zillow, said in a statement.
“In general, homeowners in most areas we cover are struggling with foreclosures pouring into the market, large amounts of negative equity and dropping home values. On the positive side, in the third quarter, some markets — particularly those hit hardest in the downturn — showed smaller year-on-year declines than in the prior quarter,” he said. “Our optimism here, though, must be tempered by the knowledge that the larger economic problems that emerged in the fourth quarter will likely further challenge the real estate market.”
The US housing market is suffering the worst downturn since the Great Depression as a huge supply of unsold homes, tighter lending and record foreclosures push down home prices.
Thirty of the 163 metropolitan statistical areas, or MSAs, covered in the Zillow Real Estate Market Reports showed gains in the Zillow Home Value Index, or median value of all homes in the area, over the first three quarters of the year, with the Jacksonville, North Carolina region seeing year-over-year appreciation of 4.9 per cent. The change in value was calculated by averaging the year-over-year change in each of the first three quarters of the year, the reports showed.
The US housing market, with falling prices, rising foreclosures, and large numbers of “underwater” mortgages, remains the largest unresolved issue for the global economy.
The Stockton, California region fared the worst in the first three quarters of 2008, with home values sliding 32.3 percent year-over-year. The Merced, California area followed with home values declining 31.2 per cent year-over-year in the first three quarters of 2008, the reports showed.