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Miami: Property values in US cities are expected to tumble by $1.46 trillion in 2008 due to the housing downturn and subprime mortgage crisis that has pushed the US economy to the brink of recession, American mayors were told last week.
Cities, where some 85 per cent of the 300 million Americans live, face weak economic growth and tepid job markets from the housing crisis and rising fuel and food prices, according to the study by private analysts Global Insight for the US Conference of Mayors meeting in Miami.
Just eight months ago, researchers predicted property values would shrink by $1.2 trillion this year, the study said.
"Metros are expected to suffer a $1.46-trillion decline in property values in 2008," the study said. "The increased loss is a result of even greater deterioration in home markets and prices than anticipated."
The decline is the equivalent of $21,277 per home, the study said.
Facing eroding property values, coupled with high gas prices and a weak job market, US cities were unlikely to see an economic upturn until mid to late 2009, said David Iaia, an official with Global Insight.
"Housing will bottom out at the end of this year and that will contribute to growth in 2009," he said.
Cities averaged 2.8 per cent economic growth from 2005-07 but that figure was expected to drop to 1.4 per cent this year and rise a shade to 1.5 per cent in 2009, the study found.
Ninety-three per cent of metros 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 metros were expected to see growth.
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