One of every five U.S. home owners owed more on their mortgage than their home was worth in the fourth quarter, according to real estate website Zillow.com.
Experts says that the trend that poses a serious threat to the U.S. housing market's recovery. Homeowners with "underwater" mortgages are more prone to defaults and foreclosures. They typically do not qualify for refinancings and are unable to sell their homes because they would need to cough up cash at closing time to pay off their mortgage.
Other negative factors revealed with the Zillow report include:
- The percentage of American single-family homes with mortgages in negative equity rose to 21.4 percent in the fourth quarter from 21 percent in the third quarter.
- U.S. home values declined again in the fourth quarter, as the Zillow Home Value Index fell 5 percent year-over-year and down 0.5 percent quarter-over-quarter, to $186,200.
- It was the 12th consecutive quarter of year-over-year declines.
One in five, or 29 of the 143 markets tracked by Zillow, had at least five consecutive month-over-month increases in home values during 2009 before values began to flatten or fall again in the second part of the year. These markets included the Boston, Atlanta and San Diego metropolitan areas. Just 28.5 percent of home sales nationwide sold for less than what the seller originally paid.
Zillow forecasts a definitive bottom in home values in the second quarter of 2010, cautioning that the arrival of the bottom does not mean that recovery is around the corner.