Over $2 Trillion in Home Equity Stripped Away in 2008

All in all, residential properties in the United States are set to lose well over $2 trillion in value by the end of 2008, according to a report released Monday by ""Zillow.com"":http://www.zillow.com.
Home values declined 8.4 percent, losing $1.9 trillion, during the first three quarters compared to the same period in 2007, the online real estate company said. And property values are expected to fall further still throughout the fourth quarter, as the country battles a deepening recession and a continuing rise in foreclosure numbers.
""Underwater"" was the real estate buzzword of the year, as plummeting values have left millions of American households owing more on their mortgage than their homes are worth. Zillow estimates that approximately 11.7 million borrowers - which translates to one in seven, or 14.3 percent, of all homeowners - are now underwater on their home loans.
""This year marked the acceleration of the market correction, and is likely to end with the eighth consecutive quarter of declines in home values,"" said Dr. Stan Humphries, Zillow’s VP of data and analytics. ""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,"" Humphries said.
Only thirty of the 163 metropolitan statistical areas (MSAs) covered in the Zillow Real Estate Market Reports showed gains in median home values over the first three quarters of the year. The Jacksonville, North Carolina, region saw year-over-year appreciation of 4.9 percent. Also performing well were the Winston-Salem, North Carolina and Anderson, South Carolina MSAs, with year-over-year increases of 4.1 percent and 3.5 percent, respectively. The State College, Pennsylvania (3.4 percent) and Burlington, North Carolina (3.1 percent) metros rounded out the five top performing housing markets.
All of the five lowest housing markets in terms of value appreciation came out of California. The Stockton region fared the worst during the first three quarters of 2008, with home values sliding 32.3 percent year-over-year. In the Merced metro, home values fell 31.2 percent over the first three quarters of the year, followed by Modesto (-30.4 percent), Salinas (-30 percent), and Vallejo-Fairfield (-27.8 percent).