Washington D.c., MD (PressExposure) March 05, 2009 -- In the fourth quarter of 2008, more than 8.3 million home owners in the U.S. owed more on their mortgages than their properties were worth and an additional 2.2 million people will soon be joining them if house prices drop by further 5%.
A report just out concludes that, 'The recession cut home values by $2.4 trillion last year" and "We have way too much supply and not enough demand and people aren't going to purchase a home as long as prices keep falling. And someone who is worried about their job isn't going to purchase a home either".
The total value of residential properties in the U.S. fell to $19.1 trillion by the end of 2008, which is down from a $21.5 trillion figure of a just year ago, and California homes alone lost more than $1.2 trillion in value last year, which is approximately one half of the total decline.
The fastest drop on record occurred in December 2008, when prices fell in twenty U.S. cities by 18.5% and sales of previously occupied homes, which account for about 90% of all houses dropped in January to the lowest number since 1997, which is when the 'National Association of Realtors and Commerce Department' started keeping its records.
The figures were based upon approximately 42 million mortgaged properties and included single- family homes, co-operatives, condominiums, town homes and attached properties containing up to four units. The report included homes priced from $70,000 to $1.25 million which would account for 85% percent of all mortgages in the U.S.
Prices in 20 U.S. cities fell 18.5 percent in December from a year earlier, according to the S&P/Case-Shiller index, which if true would make it the fastest drop on record.
Sales of previously occupied homes, which account for about 90% of the total market fell in January to the lowest since 1997, and new home purchases plunged to the lowest since records began in 1963.
Other data suggests that around 230,000 loans moved into negative equity in the fourth quarter of 2008 with California, Texas and Nevada being the worst hit, with Florida and Virginia being close behind.
Payrolls plunged by 598,000 for the tenth straight month in January causing the highest unemployment rate since 1992, and U.S. foreclosure filings exceeded 250,000 for the same period.