Many US homes worth less than mortgage

Aug 13, 2008
Many US homes worth less than mortgage

NEW YORK: Just how bad is the United States housing market?

Well, almost one-third of Americans who bought homes in the past five
years now owe more on their mortgages than their properties are
worth.

Second-quarter home prices have fallen 9.9 per cent from a year
earlier, giving 29 per cent of owners negative equity, said
Zillow.com, an Internet provider of home valuations.

Of those who bought houses at the 2006 peak of the US housing market,
45 per cent are now underwater, said the company.

Negative equity and declining prices are making it difficult for home
owners to sell property for a profit. Almost one-quarter of US homes
sold in the past year went at a loss, Zillow said.

That contributes to the foreclosure rate because some home owners
cannot absorb the loss and end up surrendering their homes to the
bank that holds the mortgage, said Mr Stan Humphries, Zillow's vice-
president of data and analytics.

'For homeowners who need to sell, this is a gravely serious
situation,' he said in an interview.

'It can also be harmful to communities where the number of unsold
homes adds more to inventory and puts downward pressure on prices.'

The 9.9 per cent decline in home values was the largest on a year-on-
year basis in at least 12 years, Zillow said.

The median home price of US$206,919 (S$290,000) was the lowest since
the fourth quarter of 2004, the company added.