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Zillow: $6.1 Trillion in Equity Gone

Seattle-Home Values fell almost 12% nationally in 2008, with much of the decrease coming in the fourth quarter, according to Zillow.com.

That means homeowners lost $3.3 trillion in equity value for the year, with $1.4 trillion of the decline in housing values coming during the fourth quarter alone.

Home values have now fallen for eight consecutive quarters, Zillow said. Since the housing market's peak in 2006, homeowners have lost $6.1 trillion in equity value, according to the Zillow index.

Foreclosure sales made up more than one of every five transactions last year, Zillow said. Another 11% of sales in 2008 involved short sales.

At the end of last year, Zillow estimates that 18% of homeowners with a mortgage were "underwater," meaning they owed more than their home was worth. Moreover, Zillow said that more than one-third of homes sold in 2008 were sold at a loss.

And a look at local markets doesn't show many bright spots.

Some markets that had weathered the downturn better than most saw price declines start to accelerate in the fourth quarter, including Seattle and Portland. Both cities saw year-over-year price declines that were greater than the national median for the first time.

And Manhattan saw a year-over-year price decline for the first time since Zillow started tracking the data during the fourth quarter. Prices in New York's most famous borough were down 6% from a year earlier.

"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 Stan Humphries, Zillow vice president of data and analytics, in a news release.

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