Home Values To Drop
Home price data provider, Zillow, is predicting a $1.7 trillion fall in the value of American homes.
The Zillow interview on Bloomberg Television is a prediction for the total property price fall in 2010. This exceeds the loss of value seen last year. In 2009 American home value fell by $1.05 trillion.
If the prediction by Zillow is correct then the total value lost on American homes from the peak year of 2006 is $9 trillion.
Zillow’s chief economist, Stan Humphries is predicting that property values will continue to decline in 2011. He is quoted as saying “the back half of 2010 looked horrible and 2011 should look like the mirror image of that.”
According to Zillow this fall in value has caused more properties to be worth less than their mortgage, pushing a number of homeowners into foreclosure. 23.2 percent of homeowners now find themselves with mortgages in negative equity.
Demand for housing has also collapsed after the government’s tax credit expired and unemployment continues to hover around 10 percent (lower in Austin). The annual pace of sales fell to 4.43 million in 2010, compared to 5.98 million last year. The decade averaged 5.81 million according to the National Association of Realtors.
The median property price for American homes was $170,500. In 2009 it was $172,000. Zillow believes the continuous fall in property prices will stop falling in the latter half of 2011. However, it will take three to five years for the property market to start showing strong gains in value.
Photo courtesy of New Jersey Real Estate Report.