Some 21.9% of home owners now have properties worth less than their mortgage, a significant increase from the 17.6% in the last quarter of 2098, figures from Zillow.com show.
At the end of April residential property values posted a year-over-year decline of 14.2%, the ninth consecutive quarters of decline. The research also shows that eight regions, including Modesto and Stockton in California and Fort Myers in Florida have now experienced median value declines of more than 50% since their peaks.
This potentially means a large handful of troubled homeowners will not qualify for the Obama administration's home refinancing program. In order to be eligible, a homeowner's mortgage must not exceed 105% of the current value of the home. However, analysts point out that slowing declines are an early sign of improvement.
Meanwhile, potential sellers appear to be waiting on the sidelines until evidence of an improved real estate market emerges.
In a separate survey a third of homeowners said they would be at least likely to put their homes on the market in the next 12 months if they saw signs of a recovering real estate market.
'By our calculations, this could translate into as many as 20 million properties that could seep into the market as prices stabilize, maintaining a constant stream of supply that far outpaces demand, thus keeping prices flat,' Zillow said.
Overall the Obama administration is trying to talk up hopes of a recovery. Chairman of the Federal Reserve, Ben Bernanke, said this week that the US economy should begin a fragile recovery by the end of this year, which would seemingly boost activity within the property market.
