More than one in four homeowners was in a negative equity position in the fourth quarter, according to a new report released by Zillow today.
The Q4 2010 Zillow® Real Estate Market Reports revealed that 27 percent of homeowners owed more on their mortgages than their homes were worth, up from 23.2 percent in the third quarter.
Fewer than one in every 1,000 (0.09 percent) homes were liquidated via foreclosure in December, down from 0.12 percent two months earlier, when foreclosure liquidations peaked.
But foreclosures are expected to increase again early this year, which may push negative equity levels lower as some underwater homeowners lose their homes to foreclosure.
However, there are still some options to refinance with negative equity, assuming the mortgage isn’t excessively underwater.
Meanwhile, home values fell 5.9 percent year-over-year, and are now 27 percent lower than the peak seen in June 2006.
The fall was tied to the expiration of the homebuyer tax credit, as evidenced by a steeper home price decline in the second half of 2010.
Looks like it was a big waste ($22 billion) of money…