The nation’s housing and mortgage crisis has significantly put a dent in previously overvalued markets, but some of the nation’s already hardest-hit markets continue to see significant disconnects between home prices and rents — meaning there may be much further to fall. A study released Tuesday by the Center for Economic and Policy Research and the National Low Income Housing Coalition evaluated the median home price and fair market rent in 100 different metropolitan areas. The study found that while home prices have collapsed in key markets, “prospects for accumulating equity still look grim for homeowners as prices are far from reaching their historical norm,” defined by the authors as roughly 15 times median annual rent. Current homeowners in bubble markets — those that have not already defaulted, at least — will still leave their homes with large amounts of negative equity, if house prices return to trend levels. Many face the prospect of never finding themselves with equity in the next five years, especially after accounting for selling costs and moderate inflation. For example, the study projects that by the year 2012, homeowners in New York will have on average $101,964 of negative equity; and in Los Angeles, the shortfall would be an average of $168,069. The CEPR and NLIHC argue that providing rental options in these markets will become critical to reaching stability. “For the foreseeable future there will be more renters in US housing markets, and many communities that do not proactively accommodate them will either face thinner housing markets or a potentially disruptive, unregulated shadow rental market,” the study’s authors argued. The report also notes the problems that many homeowners are likely to face finding quality rental housing due to its limited availability. Read the full report here. “Despite the extreme downward pressure in homeownership and labor markets, rental vacancy rates remain stable and rents continue to inch up,” said Danilo Pelletiere, NLIHC research director and a co-author of the report. “There was a critical need for affordable rental housing before the foreclosure crisis and the problem is only getting worse. Creating affordable rental housing in the face of foreclosure is important to keep people in their communities and stabilize housing markets.” Part of the solution, the research authors argue, is to convert vacant and foreclosed housing into viable rental units in some of the nation’s most shell-shocked housing markets — “areas where there is no non-speculative, qualified home purchase demand,” or at least not enough of it to sop up existing housing units, they contend. Places like Stockton, Calif. may be a good place to start. Write to Paul Jackson at [email protected].