By Lauren Riefflin
Homes in the United States are expected to lose more than $681 billion in value during 2011, according to a Zillow analysis released Thursday. While this year’s total value loss is high, it is 35% less than the $1.1 trillion lost in 2010. Additionally, this year’s total value loss is the lowest recorded during the last five years.
“While homeowners suffered through another year of steep losses, the good news is that homes are losing value at a substantially slower pace as the market works its way towards the bottom,” said Zillow Chief Economist Dr. Stan Humphries. “Compared to last year when we saw sharp declines following the expiration of the homebuyer tax credits, this year we saw some organic improvement in home values, in terms of a slowed depreciation rate, which resulted in a smaller total value loss for the year.”
Zillow’s analysis shows less value was lost in the latter half of the year due to increased stabilization of home values. Over $454 billion in value was lost from January to June compared to $227 billion lost from July to December.
Despite the fact that the majority (92%) of the 128 markets analyzed showed home value loss this year, 81 markets saw an improvement in home value loss in 2011. California, on the other hand, had several markets that reported an increase in home value loss in 2011 versus 2010. This largely can be attributed to a temporary increase in home values during the first half of 2010 due to a California-specific homebuyer tax credit, which artificially boosted sales and demand in the area.
It was a rough year for the housing market, but Dr. Humphries believes we’re closer to the end of the housing recession than the beginning. “We expect to see another 2% to 4% depreciation before reaching the bottom in late 2012, early 2013,” continued Humphries. “After that, we expect home values to remain relatively flat for the next 3 to 5 years.”
For a closer look at the results and methodology behind this analysis, visit Zillow Real Estate Research.