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Report: Housing industry loses $1.7 trillion in value

by Jorge Hernandez on December 9, 2010

While it seemed as though the housing market was stabilizing early in the year, data from the online real estate database Zillow indicates that the industry will lose $1.7 trillion in value 2010 – a 63 percent increase in losses compared to 2009.

Though it seems like a gloomy prospect, industry experts warn that it may not be as bad as it seems because there are a lot of areas to consider. There were some markets where value actually increased, such as Boston and San Diego. Additionally, analysts believe that the market will likely bottom out sometimes next year meaning that there will be no place for it to go but up.

"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," Stan Humphries, Zillow’s chief economist, said in the statement. "Government incentives can only temporarily hold back the tide."

Although this year was particularly bad, there has been a sharp decline in housing value for nearly four years. According to the website, since it was at its peak midway through 2006 the industry has lost around $9 trillion in values.

Bloomberg reports that despite an increase in demand at the start of the year following the government-issued tax credit, the demand has dropped considerably since then, and fell to an annual pace of 4.43 million in October, which is well below the average of 5.81 million over the past decade.

There are also an estimated 8 million homes in default or foreclosure, according to the news source. The number of homeowners with negative equity, meaning they owe more on their mortgages than their homes are worth, also increased from 21.8 percent to 23.2 percent in the last year.

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