Zillow: Home values crater by $1.7 trillion in 2010

U.S. homes are expected to lose more than $1.7 trillion in value this year, 63% more than the estimated $1 trillion lost in 2009, according to Zillow. The decline brings the total value lost since the market peaked in June 2006 to $9 trillion. By comparison, from 2001 to the end of September 2010, the war in Iraq has cost $750.8 billion, according to a September report by the Congressional Research Service. The second half of the year was more punishing on values. From January to June, the housing market lost $680 billion. From June to December, Zillow projects residential home value losses will top $1 trillion. Less than one-fourth, or 31, of the 129 markets tracked by Zillow showed gains in total home values during 2010. Among those were the Boston metropolitan statistical area which gained $10.8 billion in value, and the San Diego MSA, which gained $10.2 billion. “Government interventions like the homebuyer tax credit helped buoy the market during the second half of 2009 and the first half of 2010, but we saw a renewed downturn in the last half of this year.  It’s a testament to the nearly irresistible force of the overall market correction that government incentives can only temporarily hold back the tide, and that the market will ultimately find its natural equilibrium of supply and demand,” said Zillow Chief Economist Dr. Stan Humphries. (Click to expand.) Write to Kerry Curry.