A study out of USA Today shows 91% of homes purchased in Merced last year are now worth less, than the money owed on them.

The city of Merced is tied at 91% with Stockton-Lodi.

Realtors in Merced say one reason is because there were just too many homes built there.

But they say don't worry; the market will come back around.

Sue first has lived in the city of Merced since July of last year, that's when she purchased this home on El Capitan Avenue.

Sue First, Merced homeowner: "I thought well I plan to live and die here, so I wasn’t looking at the short term, I was more focused on the long-term."

That's why first says she's not upset with the fact that she now owes more on her house than what it's actually worth, $30,000 more.

But she's not alone.

A new study by zillow.com says 91 percent of those who purchased a home in 2007, now owe more than their home is worth.

According to the study, the City of Merced has the highest percentage in the country, tied with Stockton-Lodi.

According to Data Quick, an online research firm, at this time last year, the median price for a home in the City of Merced was $286,000 today, the median price has decreased by more than $100,000.

Now experts say what some who are struggling large mortgages are doing is selling their home and leasing it back from the buyer, which many times is a family member or friend.

But the Merced County Association of Realtors says avoid it.

They say its a transaction that could lead to serious consequences as its many times considered to be loan fraud.

Realtors say what it really comes down to is patience, because they say the market will eventually come back around.

Zillow.com also listed three other cities in USA Today.

Ranked below Merced and Stockton came Modesto at 85%, Las Vegas at 83% and the Riverside, San Bernardino, Ontario area at 81%.

Click on the video link to watch Preston Phillips’ live report.