Zillow recently published its Q4 2008 Real Estate Market Reports which shows that American homeowners collectively saw $3.3 trillion erased from the value of their real estate in 2008. Those type of numbers aren’t good for anyone let alone the reverse mortgage industry.
Below are some other highlights from the report.
- More than one-third (34.6 percent) of homes sold in 2008 were sold for a loss, up from 30.2 percent for the twelve months ending Q3 2008. While the $3.3 trillion in loss home value in 2008 can be considered akin to an unrealized loss in the stock market (i.e., people who don’t sell can wait for market values to rise again before selling, thus minimizing their particular loss), the loss for these one-third of homeowners is all too real.
- One in six (17.6 percent) of all homeowners is now underwater. The Modesto and Vallejo, Calif., markets have the worst negative equity, with more than 80 percent of all homeowners there underwater.
- The higher rates of negative equity and increasing economic insecurity are combining to push foreclosure rates higher. One in five (19.9 percent) of all real estate transactions across the country in 2008 was a foreclosure. This was an increase from Q3, when 18.6 percent of all transactions were foreclosures.
- Unfortunately, the foreclosure numbers don’t even tell the whole story of the numbers of homeowners having to give up their homes, as 10.9 percent of all transactions in the United States in 2008 were short sales, or homes sales where the lender agreed to a home price less than the amount owed on the mortgage in order to avoid the cost and time of a foreclosure.