BOSTON ( TheStreet) -- U.S. homes are on pace to lose more than $1.7 trillion in value this year, 63% more than the $1 trillion lost last year, according to an analysis by Zillow, an online real-estate marketplace.
That projection would bring the total value lost since the market peaked in June 2006 to $9 trillion. To put the hit in perspective, Zillow's chief economist, Stan Humphries, points out that the lost value is 12 times what the war in Iraq has cost the U.S. since 2001 ($750.8 billion, according to a September report by the Congressional Research Service).
Rather than slowly reversing, the trend seems to be accelerating again. 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 this year. Among those were Greater Boston, which gained $10.8 billion in value, and homes in the San Diego market, which gained $10.2 billion.The total estimated home value change from 2006's peak was a loss of $677 billion in the Los Angeles area, a $276 billion drop in the Chicago market, a $602 billion drop in the New York City market and a decrease of more than 324 billion in the Miami-Fort Lauderdale area. "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," Humphries says. "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." "Government incentives can only temporarily hold back the tide," he added. "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," he says. Declines in home values have led to increases in the percentage of homeowners in negative equity. At the end of last year, 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 this year -- the last time Zillow calculated negative equity -- 23.2% were underwater. -- Written by Joe Mont in Boston.
>To contact the writer of this article, click here: Joe Mont. >To follow the writer on Twitter, go to http://twitter.com/josephmont. >To submit a news tip, send an email to: email@example.com.