The housing bubble and subsequent carnage in the market have wiped out nearly $9 trillion in home equity since the peak of values in 2006, according to a new report from Zillow Real Estate Markets.
Zillow, in a statement Thursday, said U.S. home equity will slip by $1.7 trillion by the time 2010 ends, compared to a $1 trillion decline the year before.
"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," said Zillow chief economist Stan Humphries. "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."
According to Zillow, since 2006 values have fallen the most in the Los Angeles metro area ($677 billion in lost equity), followed by New York City (-$602 billion), Miami/Ft. Lauderdale (-$324 billion), Chicago (-$276 billion), and San Francisco (-$267 billion).
The immediate outlook for values offers little in the way of optimism. "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," Humphries said.
Only 24% of the 129 markets Zillow tracked increased in total home value this year. Home values increased $10.8 billion in the Boston metropolitan statistical area (MSA), and $10.2 billion in San Diego MSA.
Continued declines in home values are expected to feed foreclosures and stifle the second lien lending market, a business now dominated by commercial banks.
