Nearly one out of three homes sold in the last year was sold at a loss, and an estimated one in seven U.S. homeowners were "upside down" on their loans at the end of September, according an analysis of public records in 163 markets by Zillow.
Zillow estimates that the percentage of borrowers upside down -- owing more on their mortgage than their home was worth -- was even higher among those who bought in the last five years: 29.5 percent.
Nationwide, home prices have fallen 9.7 percent in the last year and 12.8 percent since the market peak in 2006, Zillow said.
Homeowners were considered to have negative equity if Zillow's estimate of their home's current value was less than the original mortgage, the company said in releasing its third-quarter market report.
Many real estate professionals question the accuracy of Zillow's home valuations, however, and the company said it also excluded principal payments and equity withdrawals since loan origination in its calculations.
Foreclosures made up close to one in five transactions in the last year, Zillow said, and more than half of sales in some distressed markets like Merced and Stockton, Calif.
While many reports focus on year-over-year price changes, Zillow -- which claims its quarterly market reports are the most comprehensive of their kind -- also looks at long-term trends.
Looking back five years, Zilllow reported flat or negative long-term price appreciation in about one quarter of the markets it analyzed.
That's an indication "of the enormous amount of value that has been taken out of the real estate market" in the past few years, which includes seven consecutive quarters of decline, said Zillow's vice president of data and analytics, Stan Humphries.
Of the 27 metropolitan statistical areas (MSAs) showing long-term depreciation, prices were down most in Stockton (-3.8 percent five-year annualized change), but also in areas like Boston (-1 percent) and Cleveland (-0.8 percent). Another 12 markets saw flat five-year annualized returns.
Looking back 10 years, Detroit was the worst-performing market, with a five-year annualized change of -3.1 percent and a 10-year annualized change of 0.9 percent. That compares with a 3.4 percent five-year annualized change for the nation as a whole and a 6.1 percent 10-year annualized change.
The percentage of homes sold at a loss in the past 12 months shot up from 23.7 percent at the end of the second quarter to 30.2 percent in the latest report, which includes data through the end of September. More than half of homes were sold at a loss in 17 markets, all but three of which were in California.
Zillow calculates whether a home was sold for a loss by comparing public records of sales during a quarter with the last recorded sale of a home. The calculation does not take into account closing costs or commissions.
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