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US housing market plummets in value

‘RUNAWAY TRAIN’ Foreclosures have pushed down prices and more than 2.3 million properties got a default or auction notice or were seized by lenders last year

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Chris Smith carries out his family’s belongings during an official eviction from on Monday in Adams County, Colorado. The family had been renting from the house’s owner, who collected the monthly payments but had stopped paying his mortgage. The bank foreclosed on the property and called the Adams County Sheriff’s office to supervise the eviction.

PHOTO: AFP

The US housing market lost US$3.3 trillion in value last year and almost one in six owners with mortgages owed more than their homes were worth as the economy went into recession, Zillow.com said.

The median estimated home price declined 11.6 percent last year to US$192,119 and homeowners lost US$1.4 trillion in value in the fourth quarter alone, the Seattle-based real estate data service said in a report yesterday.

“It’s like a runaway train gaining momentum,” Stan Humphries, Zillow’s vice president of data and analytics, said in an interview. “It’s difficult to say when we’ll see a bottom to the housing market.”

The US economy shrank the most in the fourth quarter since 1982, contracting at a 3.8 percent annual pace, the Commerce Department said on Friday.

Record foreclosures have pushed down prices as unemployment rose. More than 2.3 million properties got a default or auction notice or were seized by lenders last year, according to RealtyTrac Inc, a seller of data on defaults.

About US$6.1 trillion of value has been lost since the housing market peaked in the second quarter of 2006 and last year’s decline was almost triple the US$1.3 trillion lost in 2007, Zillow said.

Values have dropped for eight straight quarters. They fell in Manhattan for the first time since Zillow began including the New York City borough in its records two years ago.

Manhattan’s estimated median price dropped 5.8 percent to US$914,544. Seattle and Portland, Oregon, values tumbled 12.1 percent and 11.7 percent, respectively, the first time those cities dropped more than the national decline, Zillow said.

More than 2.6 million US jobs were cut in 2008 and the unemployment rate rose to 7.2 percent in December, the highest in almost 16 years, the Labor Department said.

“A witch’s brew of economic insecurity, foreclosures and tightened lending standards are helping to keep hard-hit markets down and to widen the scope of markets showing declines,” Humphries said in a statement accompanying the report.

The number of homeowners with negative equity, or those who owed more on their homes than the property was worth, rose to 17.6 percent from 14.3 percent in the third quarter, Zillow said. The company began its quarterly reports in 2006.

“Negative equity will trigger new foreclosures and that will add to inventory and depress prices,” Humphries said.

Almost 90 percent of the 161 metropolitan areas Zillow surveys showed values falling in the fourth quarter, including Rochester, New York and Winston-Salem, North Carolina, which had previously held up, Zillow said.

The company compiles data from multiple listing services, county assessors and recorders, and information from its users.

Estimated median prices fell 6.2 percent to US$395,478 in the Long Island-Northern New Jersey-New York metropolitan area.

They dropped 21 percent to US$410,692 in Los Angeles. Values fell 26.8 percent to US$182,483 in Las Vegas and 22.3 percent to US$179,847 in Phoenix, Arizona.

Fayetteville, North Carolina, led the nine Zillow markets showing price increases, with a 6.9 percent gain to a median US$112,737. Values in Yakima, Washington, advanced 6.2 percent to US$134,545. Utica-Rome, New York, rose 5.3 percent to US$107,595, Zillow said.

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