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.
Blake Pierson
December 10, 2010 at 1:57 pm
Tara – thanks for the article! Always think it’s interesting slicing the number (or time horizons) in different ways. For instance, see this blog post by Homeboodle: blog.homeboodle.com/2010/12/09/despite-crash-home-prices-exit-2000s-way-up/. If you look at the entire decade of the 2000s, home prices increased quite significantly, even despite the crash. Home prices also outperformed the S&P 500. Of course it’s always a long way down from the height of any boom, and if you happened to buy during the peak of the housing boom you are no doubt hurting, especially if you’re in a position where you have to sell at a loss. If you are in the position to buy, however, several arguments can be made that there’s never been a better time (see: blog.homeboodle.com/2010/12/08/the-american-dream-on-sale/). Thanks again!
Matt Thomson
December 10, 2010 at 4:12 pm
Any statistics on how much they increased in the previous 4 years? I can be real proud of myself for losing 50lbs in a year, but really that just means that I gained 50lbs in the first place.
FlatFeeRealty.com
December 11, 2010 at 8:20 am
Thanks for the great depressing news! Uggggg!!!!
Agent for Movoto
December 13, 2010 at 1:19 pm
yup, really depressing news. let’s just let the worst be over already, please?