HOME values in the United States have dropped 7.7 percent in the first quarter to the lowest in almost three years, according to an online real estate data provider.
The decline is the biggest in 12 years of data compiled by Seattle-based Zillow.com, a Website providing owners, agents and buyers with value assessments for single-family homes, co-operative apartments and condominiums.
US house prices dropped for the first time since the 1930s last year, discouraging buyers, who feared negative equity ?? owing more on their home than it's worth. That's already happened to almost 52 percent of homeowners who bought in 2006 when prices were at their peak, Zillow estimated.
At the same time, record foreclosures are adding to a glut of unsold homes, Bloomberg News said.
"While the high rate of negative equity has little consequence to owners staying in their homes, it can be devastating to those who need to sell immediately or refinance," Zillow's Stan Humphries said yesterday.
"The inability to secure refinancing is ultimately contributing to the growing rates of foreclosure in many parts of the country."
About 30 percent of existing US homes sold over the next two years will be foreclosures, according to a report by Lehman Brothers Holdings economists Michelle Meyer and Ethan Harris.
New foreclosures hit an all-time high at the end of 2007 as borrowers with adjustable-rate loans walked away from properties before their payments increased, according to the Mortgage Bankers Association. The median price of an existing home dropped 7.7 percent from a year earlier in March, the National Association of Realtors said.
Small down payments were a contributor, Zillow said. In Las Vegas, the median down payment in 2006 was 2 percent and values there have fallen 25 percent, leaving 90 percent of borrowers owing more than their homes are worth.
Zillow's report showed 130 out of 160 metropolitan areas surveyed now have median home prices below last year's. Of the 10 metropolitan areas with biggest drops, five were in California, where prices there declined 26 percent.
Over the past five years, the nation as a whole is still showing a positive return. About 144 areas, 90 percent of those Zillow surveyed, have median prices above 2003 levels.