U.S. Homeowners Lost $5.9 Trillion Since 2006 Peak
 Dan Levy - Bloomberg
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December 10, 2009
 |  | A phenomenal amount of wealth has been erased since the housing bust. For many households, most of their wealth is tied up in real estate.
- Stan Humphries, Zillow |  | | |
U.S. homeowners have lost about $5.9 trillion in value since the housing market’s peak in March 2006 as mounting foreclosures and the recession weighed on prices, according to Zillow.com.
Almost half a trillion dollars was wiped out this year through November as housing headed for a third straight annual decline. New foreclosures and higher mortgage rates in 2010 may hinder a rebound, the property data service said today in a statement.
“A phenomenal amount of wealth has been erased since the housing bust,” Stan Humphries, chief economist for Seattle- based Zillow, said yesterday in an interview. “For many households, most of their wealth is tied up in real estate.”
The net worth of U.S. households at the end of June fell 19 percent from two years earlier to $53.1 trillion, according to Federal Reserve data. Employers have cut more than 7.2 million jobs since the start of the recession in December 2007. Unemployment was 10 percent in November as payrolls declined by 11,000, the Labor Department said last week.
LaVonna Gottschall paid $260,000 for her Merced, California, home in September 2007. She put down more than half the price and financed the rest with a 30-year fixed loan. Today, houses in her neighborhood are worth 59 percent less, according to Zillow.
“I almost wiped out all my savings,” Gottschall, 64, a retired insurance-company clerical worker, said yesterday in an interview. “I did the right thing. I didn’t get in over my head. Now I’m living month-to-month.”
Foreclosure Filings
The slowing of property declines because of a government tax credit for first-time buyers and record-low mortgage rates will be tested as more foreclosures reach the market and borrowing costs rise, Humphries said. More than two-thirds of the 154 markets tracked by Zillow have lost value this year.
Home foreclosure filings surpassed 300,000 for the eighth straight month in October, according to RealtyTrac Inc. More defaults and job losses “loom over any nascent housing recovery,” James Saccacio, chief executive officer of the Irvine, California-based seller of default data, said Nov. 12.
The value of U.S. housing today is about $24.7 trillion, down 19 percent from the market’s peak, according to Zillow. Homes declined $489 billion in the first 11 months of the year.
Biggest Drops
Merced had the biggest percentage loss in house value from January through November with an estimated 37 percent decline, according to Zillow. Las Vegas was second at 25 percent. The loss was 21 percent in Fort Myers, Florida; 17 percent in Stockton, California; and 16 percent in Orlando, Florida.
Values dropped 16 percent in Bakersfield, California, and Anderson, South Carolina, and Phoenix; and 15 percent in Naples, Florida, and Modesto, California, rounding out the 10 biggest declines, Zillow said.
Los Angeles had the biggest dollar loss with an estimated $60.8 billion wiped out, Zillow said. Chicago followed with a decrease of $49.6 billion, New York was third at $49 billion, Miami-Fort Lauderdale was fourth at $45.9 billion and Phoenix fifth at $45.1 billion.
Boston had the biggest dollar gain, at $23.3 billion, according to Zillow. Increases were estimated at $12.4 billion in Providence, Rhode Island; $10.7 billion in Denver; $7.6 billion in Atlanta; and $4.7 billion in Rochester, New York.
Gottschall’s house on a cul-de-sac in Merced has three bedrooms, two bathrooms and a gray-tiled roof. She bought it to be “more comfortable” and now regrets that she didn’t wait another year before purchasing.
The median home price in Gottschall’s ZIP code sank to $95,800 in October, the latest Zillow data show.
To contact the reporter on this story: Dan Levy in San Francisco at dlevy13(at)bloomberg.net. |
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