Nearly a third of US homeowners who bought in the last 5 years owe more on their mortgage than their house is worth, according to a report by Internet valuation site Zillow. Prices of houses dropped 9.9% in the second quarter, compared to the previous year, sending 29% of homeowners into negative equity. Almost a quarter of the homes sold in the past year were sold at a loss, Zillow says.
"For homeowners who need to sell, this is a gravely serious situation,'' says an analyst. It can also be harmful to communities where the inventory of unsold homes piles up, putting further downward pressure on prices. The greatest number of homeowners with negative equity live in California; in nine of the state's metropolitan areas the percentage of negative equity topped 80%.