This week, Zillow is reporting that this year’s dip in home values is 63% bigger than the $1 trillion dip in 2009, with homes expected to be worth an accumulative $1.7 trillion less this year than last year. Zillow research reveals the total value lost since the residential real estate boom in 2006 to be a staggering $9 trillion.
The homebuyer tax incentives that ended this spring are credited as being the crutch that housing used to avoid further crashing.
“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,” said Zillow Chief Economist Dr. Stan Humphries.
Economists are not pointing to a rapid recovery with housing values and S&P Case-Shiller reports confirm Zillow’s implication that values are in the dumps.
“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,” said Humphries.
Zillow’s tracking reveals that values didn’t fall everywhere- Boston experienced a $10.8 million uptick while San Diego values rose $10.2 billion. A total of 24% of the 129 markets Zillow tracked rose in accumulative home values.
New York City lost an astounding $103.7 billion in value while Los Angeles dipped $38.6 billion making them two of the most overvalued MSAs in America.
Homeowners are selling for less and values are dropping as homeowners struggle to stay in their homes. 2011 looks to be a continued challenge and while the tax credits of 2009-2010 acted as a stimulant and were certainly welcome, it does not appear there is a stimulant on the horizon outside of the market naturally correcting over the next several years.