Ouch. U.S. homeowners lost a cumulative $3.3 trillion in home equity during 2008, with $1.4 trillion of that loss coming in the fourth quarter of last year alone, according to real estate information web site Zillow.com. The company’s estimate of U.S. home values fell 11.6 percent during 2008 to an estimated $192,119, the company said Tuesday morning. Fourth quarters decline in home prices is the eighth consecutive quarter of recorded declines. Homeowners have lost $6.1 trillion in home equity since the market’s peak in 2006, by Zillow’s estimate. Perhaps more troubling than the declines that we’ve already seen, is evidence that there may yet be further to fall — with more defaults in the pipeline. At the end of last year, Zillow estimates that one in six (17.6 percent) of all homeowners had negative equity; a number up from 14.3 percent at the end of Q3 2008. Borrowers without equity in their homes are a high risk for future defaults, as we’ve covered extensively here on HousingWire in the past. “A witch’s brew of economic insecurity, foreclosures and tightened lending standards are helping to keep hard-hit markets down and to widen the scope of markets showing declines in home values,” said Dr. Stan Humphries, Zillow vice president of data and analytics. “As more markets turn down and markets that were already down go deeper, the pace at which value is being erased from the U.S. housing stock is rapidly increasing, with more value wiped out in the fourth quarter of 2008 than was eliminated in all of 2007. The fourth quarter is the first in which we were able to see the effects of the mounting economic insecurity that picked up steam in the fall of last year.” Foreclosures and short sales Foreclosures made up nearly one in five (19.9 percent) of all transactions in 2008, Zillow said; plenty of data has been suggesting for months now that is many of the nation’s worst housing markets, foreclosures represent the vast majority of resale transactions. The hard-hit Central Valley in California continued to lead the nation in foreclosures, according to Zillow’s study, as more than half of all sales in the Madera, Merced and Stockton metropolitan statistical areas were foreclosures. The New York City metro area and the Grand Junction, Colo., had the lowest rates of foreclosure in the country, both at 3.9 percent. Add in short sales, and distressed real estate transactions represented more than 30 percent of all resales recorded last year — 10.9 percent of all real estate transactions in 2008 were short sales. And here’s the odd winner: the Lincoln, Neb., MSA led the country in the rate of short sales, with 14.1 percent of all transactions. Just 21 of 161 markets tracked by Zillow are not feeling the pinch of declining home values. Home values in the Pittsburgh MSA were flat (-0.1 percent) in 2008; a relative victory in a housing market that is quickly receding to 2002/2003 levels. And in the Fayetteville, N.C. MSA, home values actually increased 6.9 percent in 2008; the Yakima, Wash., MSA was not far behind, with home values increasing 6.2 percent during the year. But by far, the overwhelming picture painted for 2008 was one to forget for housing. And if Zillow’s estimates of the number of underwater borrowers are correct — First American CoreLogic has estimated that 7.6 million U.S. households were underwater on their mortgages as of Oct. of last year — we have much further to go to complete a correction in many of the nation’s key housing markets. Write to Paul Jackson at [email protected].