$500 billion worth of US property values wiped off this year

$500 billion worth of US property values wiped off this year
Dec 14, 2009 - PropertyGuru.com.sg

About $500 billion has been wiped off the US residential property values this year, but this figure is less than the 2008 values. Research shows that almost one in three markets has seen price increases this year.

The recent Zillow Real Estate Markets Report showed that losses slowed significantly in 2009 from £3.6 trillion in the previous year when the property bubble burst.

But as property prices are now stabilizing, most areas see an increase of its market values.

The Boston metro area had the biggest gain with $23 billion and 48 out of 154 property markets showed an increase this year. Providence and Rhode Island had the second highest gain with an increase of $12.4 billion.

But single-family home owners, who have a higher mortgage obligation than the worth of their property had declined to 21 percent from last year’s 23 percent. Increasing mortgage rates and foreclosures will hold back the recovery of real estate market, said Zillow.

Zillow's chief economist, Stan Humphries said, “Most housing markets across the country had a good summer, spurred largely by the government's tax credits for homebuyers combined with very low mortgage rates.”

“Unfortunately, we believe that demand will come under downward pressure as mortgage rates creep back up after the first quarter and that housing supply will experience upward pressure as the volume of foreclosures continues to remain high.”

“Both these factors will challenge the recent stabilization of home prices,” he added.

Los Angeles accounted the worst decline in values of about $60.8 billion. Chicago’s values fell to $49.6 billion, NY’s property values slumped $49 billion while Miami-Fort Lauderdale saw values drop to $46 billion.

Meanwhile, property prices continued to drop in October, falling 0.5 percent across the country, according to the latest data showed by Integrates Asset Services.

IAS CEO and president, Dave McCarthy, said prices will continue to fall if the unemployment rate increases as more financially-stretched borrowers foreclose.

“There is potential for another wave of inventory next year, both from private sellers and banks,” said Mr. McCarthy

“The risk of renewed home price declines remains significant,” he added.