Homes expected to lose close to $700 billion in value during 2011

According to a recent Zillow Real Estate Market Report, U.S. homes are expected to lose more than $681 billion in value by the end of 2011.

Despite the high figure expected, the number is 35 percent less than the amount lost in 2010. In 2010 home values lost close to $1.1 trilllion.

"While homeowners suffered through another year of steep losses, the good news is that homes are losing value at a substantially slower pace as the market works its way towards the bottom," said Stan Humphries, chief economist for Zillow. "Compared to last year when we saw sharp declines following the expiration of the homebuyer tax credits, this year we saw some organic improvement in home values, in terms of a slowed depreciation rate which resulted in a smaller total value loss for the year."

The bulk of the amount lost during 2011 was in the first half of the year when the housing market lost $454 billion, which might be a welcome sign to homeowners looking to place their homes on the market and get the most money for covering such expenses as their relocation cost.

Only nine of the 128 markets examined showed gains during 2011, led by the New Orleans metropolitan area, which showed a gain of $3.5 billion.

Humphries believes there will be a 3 percent total appreciation in home values by 2016.