U.S. Home Prices Fall to Pre-Bubble Levels
After reaching a peak in late 2005, the ratio of home prices to annual income fell to its lowest levels in 35 years last September, according to data compiled by Moody's Analytics, which tracked median home prices and annual incomes in 74 markets.
Though homes have become affordable, an increasing number of people who bought as the market was rising toward its peak are finding that their homes are now worth less than the amount owed on them, also known as being "underwater."
More than a quarter of households with a mortgage were underwater at the end of December, up from 23% in the third quarter, the Journal reported, citing data compiled by real estate website Zillow.com. The increase was attributable to a further decline in home prices and the temporary cessation of foreclosures by banks, which had halted the practice to correct errors in document handling.