Homeowners in the United States are on track to see over $2 trillion in home values disappear by year’s end now that one in seven, or 11.7 million, homeowners are currently “under water,” owing more on their mortgages than their homes are worth, according to a report released by real estate website Zillow.com.

The U.S. housing industry may well be experiencing the worst downturn since the Great Depression, Reuters reports, as an oversupply of unsold homes, tighter lending requirements, and a record number of foreclosures have driven down home prices for months (“Home Values Seen Losing Over $2 Trillion During 2008,” Reuters, Dec. 15, 2008). In the first three quarters of 2008, home values declined 8.4 percent over the same period in 2007 and are expected to fall even further in the next few weeks.

“In general, homeowners in most areas we cover are struggling with foreclosures pouring into the market, large amounts of negative equity, and dropping home values,” says Dr. Stan Humphries, Zillow’s vice president of data and analytics.

Some of the worst-performing markets in the country include the California cities of Stockton, Merced, and Modesto, which saw average home prices plunge 32.3 percent, 31.2 percent and 30.4 percent, respectively, in the first three quarters of 2008 (“Zillow.com on Housing and Mortgage Crisis: U.S. Homes Will Lose $2 Trillion in Home Value,” New York Daily News, Dec. 15, 2008).

Humphries says he doesn’t expect the housing market to turn around anytime soon. In fact, he anticipates that many more foreclosures will likely be added to already bulging inventories, driving prices down even further and leaving even more mortgage borrowers under water.

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