Last Updated Apr 26, 2011 5:06 PM EDT
In a report released today, the company says US homes are expected to lose an additional 63 percent more in value this year over 2009-to the tune of $1.7 trillion.
This brings the total loss since the market peaked in June 2006 to $9 trillion. To put this in perspective, $9 trillion is:
- 12 times the cost of the war in Iraq
- 900 times the value of the most expensive home in the world
- a little over 9 times the GDP of Australia.
Zillow Chief Economist Dr. Stan Humphries says, "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."
Due to the decrease in home values, many homeowners are facing negative equity on their properties, meaning that their homes have lost so much value that their mortgage payments now surpass what the home is actually worth. In the third quarter of 2010, 23.2 percent of single-family homeowners who had a mortgage were in negative equity, up from 21.8 percent in 2009.
So, is there hope for the housing market after the holiday season? Zillow doesn't think so.
Dr. Humphries says, "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."
While Zillow may not see the home value crisis improving anytime soon, there are places where home prices and values are increasing. As I reported last week, the Federal Housing Finance Agency says home prices on the whole dropped 3.2 percent from last year, but there are several states where home prices are moving toward their pre-downturn numbers.
What do you think: Will home values continue to fall in the new decade?
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Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and The Equifax Personal Finance Blog, and is Chief Content Strategist at RealtyJoin.com, a community for real estate investors.