US property prices see drop of $1.7 trillion in value in 2010, new report shows

 
The bulk of the total value lost during 2010 was in the second half of the year. From January to June, the housing market lost $680 billion, the analysis of recent Zillow Real Estate Market Reports shows.
 
From June to December, Zillow projects residential home value losses will top $1 trillion.
Less than a quarter of the 129 markets tracked by Zillow showed gains in total home values during 2010. Among those were the Boston metropolitan statistical area (MSA), which gained $10.8 billion in value, and the San Diego MSA, which gained $10.2 billion.
 
‘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,’ said Zillow chief economist Dr. Stan Humphries.
 
‘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 this year. 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 its natural equilibrium of supply and demand,’ he explained.
 
‘Unfortunately, with foreclosures near an all time high in late 2010 and high rates of negative equity persisting, it does not appear that the first part of 2011 will bring much relief,’ added Humphries.
 
Declines in home values have led to increases in the percentage of homeowners in negative equity. At the end of 2009, some 21.8% of single family homeowners with mortgages were in negative equity, meaning they owed more on their mortgage than their home was worth. In the third quarter of 2010, the last time Zillow calculated negative equity, some 23.2% were underwater.
 
A separate report from Local Market Monitor indicates that prices in many US markets will have hit bottom in the third quarter, but some large metropolitan areas, particularly in Florida, are still in trouble.
 
The report indicates a ‘definite bottom’ in Southern California, specifically the San Francisco Bay area, where the average home price stands at $642,159, a 17% drop from the peak in the third quarter of 2006. Analysts forecast that price to hold over the next year and possibly increase 1% over the next two years.
 
Home prices in Washington, D.C., Minneapolis, Honolulu and Boston also bottomed out in the third quarter. And the report says that the biggest drop over the next year is set to be in the Daytona Beach, Florida where prices should drop another 11%. A number of other Sunshine State cities, most notably Jacksonville, Lakeland, Ocala, Orlando and Cape Coral, should all see prices drop by 5% or more over the next year.
 
‘Our 12 month forecast is still very modest, because the job situation is still weak, but it won't be a surprise if home prices in these markets actually do better,’ the report said
 
It adds that three Texas areas, Austin, Forth Worth and Dallas, have seen good job growth and ‘have the potential to beat forecasted price increases over the next year’.