Homes to lose nearly $700 billion in value in 2011

The Federal Housing Finance Agency recently reported that U.S. house prices fell 0.2 percent between September and October. The slight drop in home prices illustrates the slowing depreciation of home values that plummeted in 2010.

Analysis of recent Zillow Real Estate Market Reports found U.S. homes are expected to lose more than $681 billion in value this year. 35 percent less than the $1.1 trillion in equity loss reported in 2010.

The analysis showed the majority of home equity loss occurred during the first half of 2011, with $454 billion lost between January and June. From December to July, it is predicted the U.S. housing market will have lost an additional $227 billion. Stan Humphries, Zillow chief economist, said in 2010 there was a sharp drop in home values following the expiration of the homebuyer tax credits. In 2011, the market showed signs of some organic improvements in home values.

"Unfortunately, when we look ahead to next year, the unabsorbed pool of housing supply, dragging levels of consumer confidence, high unemployment and negative equity will continue to put downward pressure on the housing market, pushing our expectation for a potential recovery into late 2012 or early 2013," Humphries said.

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