About $6.1 trillion of value has been lost since the housing market peaked in the second quarter of 2006
A for sale sign stands outside of a home in Mount Ephraim, New Jersey on Sept. 24, 2008. Photographer: Mike Mergen/Bloomberg News
Feb. 3 (Bloomberg) — The U.S. housing market lost $3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said.
The median estimated home price declined 11.6 percent in 2008 to $192,119 and homeowners lost $1.4 trillion in value in the fourth quarter alone, the Seattle-based real estate data service said in a report today.
“It’s like a runaway train gaining momentum,” Stan Humphries, Zillow’s vice president of data and analytics, said in an interview. “It’s difficult to say when we’ll see a bottom to the housing market.”
The U.S. economy shrank the most in the fourth quarter since 1982, contracting at a 3.8 percent annual pace, the Commerce Department said on Jan. 30. Record foreclosures have pushed down prices as unemployment rose. More than 2.3 million properties got a default or auction notice or were seized by lenders last year, according to RealtyTrac Inc., a seller of data on defaults.
About $6.1 trillion of value has been lost since the housing market peaked in the second quarter of 2006 and last year’s decline was almost triple the $1.3 trillion lost in 2007, Zillow said.
Values have dropped for eight straight quarters. They fell in Manhattan for the first time since Zillow began including the New York City borough in its records two years ago.
Manhattan Declines
Manhattan’s estimated median price dropped 5.8 percent to $914,544. Seattle and Portland, Oregon, values tumbled 12.1 percent and 11.7 percent, respectively, the first time those cities dropped more than the national decline, Zillow said.
More than 2.6 million U.S. jobs were cut in 2008 and the unemployment rate rose to 7.2 percent in December, the highest in almost 16 years, the Labor Department said.
“A witch’s brew of economic insecurity, foreclosures and tightened lending standards are helping to keep hard-hit markets down and to widen the scope of markets showing declines,” Humphries said in a statement accompanying the report.
The number of homeowners with negative equity, or those who owed more on their homes than the property was worth, rose to 17.6 percent from 14.3 percent in the third quarter, Zillow said. The company began its quarterly reports in 2006.
More Foreclosures
“Negative equity will trigger new foreclosures, and that will add to inventory and depress prices,” Humphries said.
Almost 90 percent of the 161 metropolitan areas Zillow surveys showed values falling in the fourth quarter, including Rochester, New York and Winston-Salem, North Carolina, which had previously held up, Zillow said.
The company compiles data from multiple listing services, county assessors and recorders, and information from its users.
Estimated median prices tumbled 6.2 percent to $395,478 in the New York-Northern New Jersey-Long Island metropolitan area. They fell 21 percent to $410,692 in Los Angeles. Values dropped 26.8 percent to $182,483 in Las Vegas and decreased 22.3 percent to $179,847 in Phoenix, according to Zillow.
Fayetteville, North Carolina, led the nine Zillow markets showing price increases, with a 6.9 percent gain to a median $112,737. Values in Yakima, Washington, advanced 6.2 percent to $134,545. Utica-Rome, New York, rose 5.3 percent to $107,595, according to Zillow.
To contact the reporter on this story: Dan Levy in San Francisco at [email protected]
Last Updated: February 3, 2009 00:01 EST
By Dan Levy
Source: Bloomberg