Losses Pile Up in Housing Market
U.S. homes were expected to lose more than $1.7 trillion in value in 2010, 63 percent more that the $1 trillion lost in 2009, according to home listing and valuation service Zillow. Since the market peaked in June 2006, U.S. homes have lost $9 trillion. Most of the value lost in 2010 occurred during the second half of the year. From January to June, home values lost $680 billion, but Zillow estimates that home value losses may have topped $1 trillion from July to December.
Despite a strong start to 2010, by the end of the year homes lost more of their value in 2010 than they did in 2009.
Government interventions, like the homebuyer tax credit, helped buoy the market during the second half of 2009 and the first half of 2010, but we saw a renewed downturn in the last half of 2010. 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 it’s natural equilibrium of supply and demand.