Zillow: Another $1.7 Trillion to the Downside in Housing

My pal Charlie is as persistent as the sunrise. So when he called me last week to give me a hard time about my 2011 Housing Market Forecast the only surprise was it that took him so long. Twenty-four hours after it hit the web I saw Charlie’s number go up on line one. You see, a real estate agent by trade, he never misses a chance to call me an idiot when in his eyes I “bad mouth the American Dream” The result has been five-year running dialog in which I have bested him every single time. The guy is a glutton for punishment. So like a good pal I answer the phone anyway even though I know I’m in store for the rerun of my nightmares. “Steve,” he says, “you can’t be serious.” “As a heart attack,” I answer, “Like it or not dude there is still another 8-10% downside.” This obviously drove him to distraction since he must have forgotten the 100 or so conversations we already had that were exactly like this one. “Not a chance this time son. There has never been a better time a house”, he told me with what I can only guess was straight face. From that point on I knew I was just wasting my time again. The dude may have been great scrum-half but he didn’t know jack about the laws of supply and demand. In fact, I don’t think they actually teach that real estate school but I hear the Kool-aid is top notch. Meanwhile, the mountain of evidence against my friend continues to mount. From Bloomberg by By Hui-yong Yu entitled: U.S. Home Values May Drop by $1.7 Trillion This Year: Zillow “ U.S. home values are poised to drop by more than $1.7 trillion this year amid rising foreclosures and the expiration of homebuyer tax credits, said Zillow Inc., a closely held provider of home price data. This year’s estimated decline, more than the $1.05 trillion drop in 2009, brings the loss since the June 2006 home-price peak to $9 trillion, the Seattle-based company said today in a statement. The drop in home values pushed more buyers underwater, meaning they owe more on their mortgages than their homes are worth, Zillow said. The percentage of homeowners with so-called negative equity reached 23.2 percent in the third quarter, up from 21.8 percent at the end of 2009. “ 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 …

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Zillow: Another $1.7 Trillion to the Downside in Housing

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