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The percentage of United States homeowners who owe more than their properties are worth declined in the second quarter as tax credits boosted prices in California and foreclosures surged, real estate data provider said.
The Seattle-based company found that 21.5 per cent of homeowners were underwater on their mortgages, down from 23.3 per cent in the first quarter and 23 per cent a year earlier, according to a report today.
The decline came as property prices in California were bolstered by state and federal benefits for homebuyers, Zillow said. Prices climbed from a year earlier in 28 per cent of the markets tracked in California, the most populous state. They gained 5.5 per cent in the Los Angeles area, 5.9 per cent in San Francisco and 7.3 per cent in San Diego.
"The double tax credits for some California homebuyers have certainly stimulated housing demand there and are partly responsible for the rapid - and likely unsustainable - rates of appreciation in many markets across the state," said Stan Humphries, chief economist at Zillow.
Homebuyers seeking the federal benefit had to sign contracts by April 30 to qualify for a tax credit of as much as US$8,000, and have until September 30 to complete their purchases. In California, buyers could qualify for a credit of as much as US$10,000 under a programme that began on May 1.
US foreclosures reached a high in June, with more than one of every 1,000 homes taken over by lenders, Zillow said. This contributed to the drop in the number of homeowners with negative equity, as some underwater properties were seized.
The number of properties receiving a notice of default, auction or bank seizure climbed in three-quarters of US metropolitan areas in the first half of 2010, Irvine, California-based RealtyTrac said on July 29.
This article can be found on South China Morning Post, Wednesday, August 11, 2010

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