Where U.S. Homeowners Are Losing Value Fastest

Recent buyers in these 10 spots owe more on their mortgages than their homes are worth.

In Depth: Where U.S. Homeowners Are Losing Value Fastest

Homeowners with Citigroup loans in foreclosure-rich Virginia Beach, Va., and Orlando, Fla., are in luck. The mortgage giant announced today that it will impose a moratorium on most foreclosures and modify $20 billion in mortgagesto enable homeowners who are not behind on their loans but in danger of falling behind to avoid foreclosure.

Those that don't fall under the plan? They're in hot water. Well, underwater.

Virginia Beach homeowners who bought homes this year possess a paltry 5.2% of home equity, and 34.5% owe more on their property than it's worth, according to Zillow.com, a real estate research group. That's the worst rate in the country. Even in Orlando and Miami, two cities hammered by bad loans and home-equity dips, only 30% and 29% of homeowners are underwater, respectively. It's a similar story in El Centro, Calif.,Bakersfield, Calif., and Cumberland, Md.

In Depth: 10 Spots Where U.S. Homeowners Are Losing Value Fastest

What's certain to follow? Foreclosures.

"Negative equity is a chief stimulant for foreclosures," says Stan Humphries, vice president of data and analytics at Zillow.com. "When facing some type of economic crisis, if you have negative equity you have a lot fewer options."

Behind the Numbers
Using data from Zillow.com, a provider of housing-market statistics, we looked at the 163 largest Census-defined metro areas in the U.S. for cities where new homeowners are losing value fastest, whether as the result of falling home prices, mortgages based on inflated values or loans that required low down payments. Foreclosure hot spots like Sacramento, Calif., Phoenix and Las Vegas didn't show up on the list as foreclosures and sales for loss over the past year wiped out heaps of properties' negative equity. In Sacramento, for example, only 17% of homeowners who bought this year are in negative equity situations, compared with 68% of those who bought in 2006.

In cities such as Yuma, Ariz., Bakersfield, Calif., or Port Saint Lucie, Fla., negative equity rates aren't evaporating nearly as quickly. In fact, of homeowners who bought this year, 34%, 31% and 28.3% are already underwater, respectively. That's worse than Phoenix, where new homeowners are underwater at a 23% rate.