Real Estate Values to Drop Another $1 Trillion

December 31, 2010 (Chris Moore)
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As we reported here on December 10th, 2010, Zillow.com’s Real Estate Market Reports had reported that total residential value losses since the housing markets peak in June 2006 had reached $9 trillion and now a survey of economists, real estate experts, investment and market strategists by MacroMarkets suggests that another $1 trillion of value will be lost over the next four years.

Terry Loebs, managing director with MacroMarkets said, “One can infer from the December data that the aggregate value of U.S. single-family homes four years from now will be roughly $1 trillion less than projected in May. Weak market fundamentals persist and continue to gnaw at wealth and confidence in these uncharted, post-bubble waters.”

The economists predict that on average they expect market values to fall .17% nationwide in 2011.

The survey is based upon the projected path of the S&P/Case-Shiller U.S. National Home Price Index over the coming five years.

Loebs added “The survey data we collected this year have consistently pointed to price stability in the intermediate- to long-term, which is reassuring in light of the volatility in actual home prices we have witnessed during the past few years. However, most experts foresee a longer road to recovery, and materially lower price performance in the coming years than they did just a few months ago.”

One bright spot, if predictions are correct, is that the panel also felt that home prices would start rising in 2012 (1.94%) and would continue to increase in 2013 (2.86%), 2014 (3.45%), and 2015 (3.67%).

Tags: residential value losses, economists, housing market, single-family homes, market value, rising home prices