U.S. Home Values Set to Plummet $1.7 Trillion: Report

By Jon E. Dougherty at 9 Dec 2010

(Newsroom America) -- Home values in the U.S. are expected to fall by $1.7 trillion this year, according to a tracking firm, as foreclosures rise and home-buying tax credits expire.

Zillow Inc., a Seattle-based firm that tracks home prices, said this year's decline would surpass the $1.07 trillion fall in prices in 2009, bringing the overall loss of value to $9 trillion since the housing peak in June 2006.

The firm said declining home values have put more homeowners under water on their mortgages, meaning they owe more for their homes than they are worth. That has led to an increase in foreclosures, which has put a glut of homes on the market and has further eroded prices.

Zillow said the percentage of homeowners with so-called negative equity reached 23.2 percent in the third quarter, up from 21.8 percent at the end of 2009.

"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 Stan Humphries, the firm's chief economist, in a statement. "Government incentives can only temporarily hold back the tide."

Of 129 metropolitan areas tracked by Zillow, only 31 - including Boston and San Diego - saw gains in home values in 2010.

Meanwhile, the National Association of Realtors said last month the median price of a home in the U.S. fell to $170,500 from $172,000 a year ago.

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