In 2008, US homeowners lost an accumulative $3.3 trillion in property, with a total of $1.4 trillion from the 4th quarter alone, based on recently published figures.
Zillow.com estimates that at the end of 2008, 17.6 percent, or one in every six, homeowners was experiencing a negative equity. This was an increase from 14.3 percent from the third quarter in 2008.
A borrower without equity in his home is a high risk for potential defaults. Dr Stan Humpries (Zillow VP of analytics and data) states that constrained lending standards, foreclosure and economic insecurity’s ‘witch brew’ help maintain hard-hit markets low and broaden the markets’ scope, showing turn downs in home values.
“As greater markets are turning down, the pace in which value was erased from the US housing stock is fast increasing, with greater value that was wiped out in 2008 fourth quarter than was eliminated in the entire 2007,” Humpries added.
The mounting effects of economic insecurity were first seen during the fourth quarter of 2007, picking up steam in last year’s fall. Humpries concluded that negative equity would cause new foreclosures and would add to depressed prices and inventory.
California’s hard-hit Central Valley is continuing to take the lead in the country in foreclosures, as over half of the sales of Stockton metropolitan statistical areas and Madera, Merced were foreclosed. Grand Junction, Colorado and the metro area of New York City had the lowest foreclosure rates in the nation, both at 3.9 percent.