SEATTLE, Dec. 9, 2010 /PRNewswire/ -- U.S. homes are expected to lose more than $1.7 trillion in value during 2010, which is 63 percent more than the $1 trillion lost in 2009, according to analysis of recent Zillow Real Estate Market Reports.
That brings the total value lost since the market peaked in June 2006 to $9 trillion. By comparison, from 2001 to the end of September 2010, the war in Iraq has cost $750.8 billion, according to a September report by the Congressional Research Service.
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 during 2010. Among those were the Boston metropolitan statistical area (MSA), which gained $10.8 billion in value, and the San Diego MSA, which gained $10.2 billion.
"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 Zillow Chief Economist Dr. Stan Humphries. "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. 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.
"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."
Declines in home values have led to increases in the percentage of homeowners in negative equity. At the end of 2009, 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 2010 – the last time Zillow calculated negative equity – 23.2 percent were underwater. Complete report