One-third of homes 'underwater' in Puget Sound region

Update Feb. 10, 2011 - The correct percentage of area mortgage holders "underwater" - as reported by Zillow.com - is 34.3%, not of all homeowners. This post has been updated to clarify that point.

Do you owe more on your mortgage than your house is worth? You’re not alone. One-third of homeowners in King, Pierce and Snohomish counties are “underwater” on their homes. "Negative equity" rose faster in this region than anywhere else in the country.

According to data from  the on-line real estate database Zillow.com, 34 percent of area homeowners owed more than their homes were worth, up from 23 percent at the end of 2009. Nationwide, 27 percent of homeowners are "underwater."  Zillow.com estimates that, on average, homes in King, Pierce and Snohomish counties are now worth the same as in the summer of 2004. 

Eric Pryne writes in the Seattle Times about the  impact negative equity can have on the economy. He quotes Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.

It increases the likelihood that owners will default-even if they still can manage the payments, he said.  After that, they probably wouldn't be able to buy another house anytime soon, he added, "and that would hold the housing market back."

Despite the climb in negative equity here, it's good to keep it in perspective. While one-third of homeowners are underwater here, 82 percent of mortgage holders in Las Vegas owe more than their house is worth.