Homeowners in U.S. Lost $5.9 Trillion Since 2006 as Defaults Cut Values

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U.S. Homeowners Lost $5.9 Trillion Since 2006 Peak (Update1)
By Dan Levy


Dec. 9 (Bloomberg) -- U.S. homeowners have lost about $5.9 trillion in value since the housing market’s peak in March 2006 as mounting foreclosures and the recession weighed on prices, according to Zillow.com.

Almost half a trillion dollars was wiped out this year through November as housing headed for a third straight annual decline. New foreclosures and higher mortgage rates in 2010 may hinder a rebound, the property data service said today in a statement.

“A phenomenal amount of wealth has been erased since the housing bust,” Stan Humphries, chief economist for Seattle- based Zillow, said yesterday in an interview. “For many households, most of their wealth is tied up in real estate.”

The net worth of U.S. households at the end of June fell 19 percent from two years earlier to $53.1 trillion, according to Federal Reserve data. Employers have cut more than 7.2 million jobs since the start of the recession in December 2007. Unemployment was 10 percent in November as payrolls declined by 11,000, the Labor Department said last week.

LaVonna Gottschall paid $260,000 for her Merced, California, home in September 2007. She put down more than half the price and financed the rest with a 30-year fixed loan. Today, houses in her neighborhood are worth 59 percent less, according to Zillow.

“I almost wiped out all my savings,” Gottschall, 64, a retired insurance-company clerical worker, said yesterday in an interview. “I did the right thing. I didn’t get in over my head. Now I’m living month-to-month.” ............(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20603037&sid=af9OWXW1MJ6k