More than 28 percent of U.S. homeowners owed more than their properties were worth in the first quarter as values fell the most since 2008, Zillow Inc. said today.
Homeowners with negative equity increased from 22 percent a year earlier as home prices slumped 8.2 percent over the past 12 months, the Seattle-based company said. About 27 percent of homes were “underwater” in the fourth quarter, according to Zillow, which runs a website with property-value estimates and real-estate listings.
Home prices fell 3 percent in the first quarter and will drop as much as 9 percent this year as foreclosures spread and unemployment remains high, Zillow Chief Economist Stan Humphries said. Prices won’t find a floor until 2012, he said.
“We get tired of telling such a grim story, but unfortunately this is the story that needs to be told,” Humphries said in a telephone interview. “Demand is still quite anemic due to unemployment and the fact that home values are still falling. And that tends to make people more cautious about buying.”
While an increase to 28% is moving the U.S. closer, I don't think we are at Critical Mass yet. My estimate is that number needs to be in the 30-45% range to create a Critical Mass that could push a waterfall event in values or capitulate some homeowners to throw in the towel in great numbers collectively.
If price won't find a floor until 2012 then he expects price to continue sliding. What he didn't state is at what pace!
The real estate market has more down side in values this year, so we should push even closer to Critical Mass.
Hope all is well.
J.D. Rosendahl, Rosey