I posted recently about the value of homes dropping in the United States. I said in my post that trillions of dollars would be lost this year due to these drops, effectively putting many homeowners under water on their mortgages. Today I did some searching for some figures, and found the stats I was looking for online at Zillow.com. Zillow, a real estate site, has a lot of information for the home buyer and prospective owner. Because I don’t like posting data without facts to back it up, I found that, according to an analysis of recent Zillow Real Estate Market Reports, American homeowners will lost an estimated $2 trillion in value during 2008. The report reveals that home values dropped 8.4% year over year through the first 3 Q’s of the year, as compared to 2007. The report reveals that one in seven of all homeowners, or 14.3%, were underwater by the end of the third quarter. Continuing into the 4th, further falls are predicted.
To date, the estimated value of loss stands at $1.9 trillion through Q3. Dr. Stan Humphries, Zillow’s vice president of data and analytics, said in a statement that “This year marked the acceleration of the market correction, and is likely to end with the eighth consecutive quarter of declines in home values. In general, homeowners in most areas we cover are struggling with foreclosures pouring into the market, large amounts of negative equity and dropping home values. On the positive side, in the third quarter, some markets - particularly those hit hardest in the downturn - showed smaller year-over-year declines than in the prior quarter. Our optimism here, though, must be tempered by the knowledge that the larger economic problems that emerged in the fourth quarter will likely further challenge the real estate market.”
This huge loss in equity and the running list of foreclosures, falling prices and a glut of unsold homes on the market is viewed as the biggest barrier to recovery of any kind in the market, both home and abroad. Without a level playing field, there is not much chance that the economy will turn around any time soon. What will be done remains to be seen. Whatever happens, we can rest assured of one thing - the $1.9 trillion that has been lost won’t be recovered. With everything else that is happening in the economy - the troubles in the stock market, the bailouts, the troubles of the Big Three - it will be a very large challenge to resolve. Let’s hope that someone has a plan.
To date, the estimated value of loss stands at $1.9 trillion through Q3. Dr. Stan Humphries, Zillow’s vice president of data and analytics, said in a statement that “This year marked the acceleration of the market correction, and is likely to end with the eighth consecutive quarter of declines in home values. In general, homeowners in most areas we cover are struggling with foreclosures pouring into the market, large amounts of negative equity and dropping home values. On the positive side, in the third quarter, some markets - particularly those hit hardest in the downturn - showed smaller year-over-year declines than in the prior quarter. Our optimism here, though, must be tempered by the knowledge that the larger economic problems that emerged in the fourth quarter will likely further challenge the real estate market.”
This huge loss in equity and the running list of foreclosures, falling prices and a glut of unsold homes on the market is viewed as the biggest barrier to recovery of any kind in the market, both home and abroad. Without a level playing field, there is not much chance that the economy will turn around any time soon. What will be done remains to be seen. Whatever happens, we can rest assured of one thing - the $1.9 trillion that has been lost won’t be recovered. With everything else that is happening in the economy - the troubles in the stock market, the bailouts, the troubles of the Big Three - it will be a very large challenge to resolve. Let’s hope that someone has a plan.
by Alden Smith
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