Property values in U.S. cities are expected to tumble by $1.46 trillion in 2008 due to the housing downturn and subprime mortgage crisis that has pushed the U.S. economy to the brink of recession, American mayors were told Friday.
Just eight months ago, researchers predicted property values would shrink by $1.2 trillion this year, according to the study by Global Insight for the U.S. Conference of Mayors meeting in Miami.
"Metro areas are expected to suffer a $1.46-trillion decline in property values in 2008," the study by the economic and market research firm said. "The increased loss is a result of even greater deterioration in home markets and prices than anticipated."
Ninety-three percent of metropolitan areas -- which collectively are home to about 85 percent of the U.S. population -- are expected to see declines in property values, the study said.
Los Angeles will suffer the biggest drop -- $203 billion -- followed by Washington, San Francisco and Riverside in California.
Only 24 of 360 cities will see property values increase, including Charlotte and Raleigh, in North Carolina, it said.
Foreclosure activity is expected to rise to 2.2 million homes, representing a property value of $488.4 billion, the study added.
"Unless institutional arrangements are made to bring mortgage holders together with buyers, 2008 will continue to see foreclosure activity accelerate," it said.
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