U.S. homeowners will likely lose more than $2 trillion in home value during 2008, according to a report released this week by Zillow.com.Home values have dropped 8.4 percent year-over-year during the first three quarters of 2008 compared to the same period last year, and at the end of the third quarter one in seven homeowners owed more on their mortgage than the home was worth. Zillow estimates that 11.7 million homeowners will be underwater by the end of the year.
But thirty of the 163 metro areas covered by the survey showed gains in home value during the first three quarters of the year. Jacksonville, N.C., Winston-Salem, N.C. and Anderson, S.C. performed the best, with year-over-year increases of 4.9 percent, 4.1 percent and 3.5 percent respectively. Stockton, Calif. fared the worst, with home values dropping 32.3 percent, followed by Merced, Calif. and Modesto, Calif., which posted declines of 31.2 percent and 30.4 percent respectively.
Dr. Stan Humphries, Zillow’s vice president of data and analytics, says homeowners are struggling with increased foreclosures, large amounts of negative equity and dropping home values. “This year marked the acceleration of the market correction, and is likely to end with the eighth consecutive quarter of declines in home values,” he says. “On the positive side, in the third quarter, some markets – particularly those hit hardest in the downturn – showed smaller year-over-year declines than in the prior quarter.”