Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter, and this proportion may rise to as much as 30% by mid-2010 as job losses and foreclosures climb, Zillow.com said in a report Tuesday.
Homeowners are being hurt by price declines. The estimated median value of a single-family house slid to $186,500 in the quarter, a 12% drop from a year earlier and the 10th consecutive quarterly decline, the Seattle real estate data service said.
"The negative-equity rate will rise and spin off more foreclosures," Stan Humphries, Zillow's chief economist, said in an interview. "I see a substantial downside risk to prices, and don't think we'll see a bottom until the middle of next year."
Home values dipped in the second quarter from a year earlier in almost 90% of the 161 U.S. metropolitan areas surveyed by Zillow, the company said. Twenty-three percent of mortgage holders were underwater at the end of June, Zillow said.
In June foreclosures accounted for 22% of total U.S. home sales, and 29% of homes sold were bought for less than what the owner originally paid, according to Zillow.
Values fell the most in Merced, Calif., tumbling 40%, to an estimated $106,500, Zillow said. El Centro, Calif., was next, with a 38% drop, to $117,400. Las Vegas was third with a 35% decline, to $140,500. Madera and Modesto, in California, sank 34%, to $144,400, and 31%, to $140,500, respectively.
Values fell 12%, to an estimated $361,000, in the New York City area; 12%, to $318,000, in Washington; 15%, to $393,800, in Los Angeles; 13%, to $202,400, in Chicago; 6.4%, to $316,000, in Boston; 4.6%, to $132,600, in Dallas, and 15%, to $490,500, in San Francisco, Zillow reported.
Fayetteville, N.C., had the biggest increase in median value, up 13%, to an estimated $120,600.
Zillow compiles data from multiple listing services, county assessors and recorders, as well as its users.