The equity stake in Americans' most important asset has dropped to its lowest level since the end of the second World War.

Home owners' home equity slipped to 46.2 percent in the first quarter this year, the fifth consecutive quarter the rate was below the 50 percent market, according to the Federal Reserve's first quarter Flow of Funds report.

Home equity is the market value of a property, minus the mortgage debt. For example, if a property is worth $300,000 and the mortgage debt is $150,000, the equity stake is $150,000 or 50 percent.

Home equity levels declined steadily even during the housing boom when consumers cashed in on cash-out refinancing, home equity borrowing and 100 percent financing.

Now, home values are falling, taking a bigger slice out of the home equity pie.

The decline in values has left many home owners with negative equity or what's called an "upside down" mortgage where the mortgage is larger than the home's value.

At the end of March, some 8.5 million home owners, 16 percent of those with a mortgage, had negative or no equity in their homes, according to Moody's Economy.com.

In some hard hit areas like California, Florida, Michigan and Nevada, more than half the home owners who purchased homes in 2006 live with upside down mortgages, according to Zillow.com.

Other than quickly paying down the mortgage or otherwise shelling out cash for equity-saving home improvements, there's little many home owners can do to hold onto or increase their equity.

Experts expect equity nationwide to decline further as falling home prices erode home prices, plunging more home owners into upside down mortgages.

Economy.com is forecasting home prices to decline by as much as 24 percent from the peak of the market. By June 2009 Economy.com estimates the number of home owners with zero or negative equity will increase to 12.2 million, or about 25 percent of all home owners with a mortgage.

Homeowners with zero or negative equity are those most likely to default on mortgage payments and walk away from their mortgages. The trend will exacerbate the housing down turn by leaving the market with more foreclosures.

The good news is that one out of every three home owners have no mortgage at all and own their home free and clear with a 100 percent equity stake.

Published: June 10, 2008

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.