The real estate Web site Zillow.com reported that 21.8% of all U.S. homes, representing more than 21 million residences, were in a "negative equity" or "underwater" position after prices dropped more than 14% nationally in the year ended March 31.
"A combination of falling prices and low down payments has left many borrowers underwater," said Stan Humphries, Zillow's vice president in charge of data and analytics. "In some markets, more than half of all homes are in negative equity."
Those markets include Las Vegas, where a whopping 67.2% of homeowners would have to bring cash to the table if they sold their homes. Other markets are Stockton, Calif., where 51.1% of homes are underwater, and Modesto, Calif., where 50.8% of homes are in that position.
"That's really important, because homeowners in negative equity have fewer options if they take financial shocks such as divorce, job loss or medical bills, making foreclosure more likely," said Humphries.
Moody's Economy.com chief economist Mark Zandi estimated that 14.8 million were underwater at the end of March.
And the sad part - Zillow believes their numbers are conservative and may actually be higher due to the factoring of HELOCs and HELs. And this 21.8% is of all homes - not just properties with mortgages.
It would be interesting to find the number of homes that are underwater due to extracting equity rather than purchasing at or close to peak. Wonder if those numbers will ever come about...