No one can dispute that these are very challenging economic times in which to live in. Each month it seems more figures are presented that show that the supposed economic recovery the country was thought to be in is anything but. Unemployment figures continue to be staggering, and with seasonal jobs coming to a close soon, they are surely bound to go higher. Other economic indicators spell out the same sad tale. One of the most important is home values and they reveal a sad truth. A new report out shows that US home values will have fallen $1.7 trillion dollars in 2010.
The report, furnished by Zillow Inc, paints a pretty grim tale of what was once a booming market in America. It was only but four short years ago that the country was at the height of the real estate market and people were buying and selling houses for far more than had been the case at anytime in the past. Then the bottom dropped out and left a lot of people in tough financial straits, with a significant investment in a piece of property that is now worth but a fraction of what it is worth now. However, $1.7 trillion dollars is simply a mind-boggling number.
So why is the home value loss so high? Foreclosures are one of the main reasons. Regardless of what the Obama Administration has tried to do to force banks to curb the relentless flow of homes they were foreclosing on, it has not stopped the bleeding. After all, even if they are not pursuing as many of these, the facts remain the same. Homeowners simply can’t make huge mortgage payments when they have no job or the resources to afford that big bill each month. So they give up and walk away.
Throw in the fact that those Homebuyer tax credits that were serving as an incentive for people to buy property now while interest rates were low are expiring and you have the perfect storm to batter the housing market yet again. In fact figures cited in Zillow’s report and by Bloomberg note that of that 1.7 trillion dollar value drop, most of it occurred in the second half of 2010. This of course coincides with those expiring tax credits and boom you have the highest value drop on record and a total loss of a whopping 9 trillion dollars in value since that 2006 period.
The report also detailed some other daunting numbers that makes it seem like this might never come to an end. The median price of a selling home dropped again this past year and add to that the fact that sales of existing homes fell almost one and a half million from this point last year and you have news that is driving Americans from their homes in bunches. This is because those drops in value are putting the homes value below what they actually owe on their mortgages, in essence leaving them underwater to use a real estate term.
The Zillow account also predicts that the problem will continue to go on in 2011, much like they have been doing. There were though some encouraging signs, as cited by Zillow’s Chief Economist, Stan Humphries. He stated that although things will continue to look bleak, Zillow’s projects that home values will stop dropping come the second part of 2011. He also stated that the housing market will start to show gains again, somewhere within 4 to 5 years down the line.
Though the company stands firmly behind their report, there are those that say these findings are inaccurate at best. Groups like the National Association of Realtors and the Federal Housing Finance Agency completely disagree with the Zillow findings and say that there will be no change in value from the 2009 level. The American public can only hope that the latter is correct and things will not get any worse before they get better.