A quarterly report released Thursday by online real estate site Zillow for the first time focuses on the choke point that's behind the frustratingly low number of homes for sale in the Bay Area.

Despite increasing prices, many homeowners still have low levels of equity and aren't willing to sell, Zillow said.

A homeowner would need about 20 percent equity to put a house on the market and cover a down payment on the next home, real estate fees and other expenses, said Zillow's chief economist, Stan Humphries. Many homes have moved back "above water" -- a home is underwater when it is worth less than the amount of its mortgage -- but that isn't enough.

"A bunch of people don't have the down payment for their next house," he said.

That has helped keep homes off the market, in what real estate agents say is a period with the fewest homes for sale in memory. The astonishingly low inventory, combined with historically low interest rates, has produced flocks of buyers bidding up prices for what little is available.

In all, 295,000 of a total of 914,000 homes with mortgages in five Bay Area counties had what Zillow is calling "effective negative equity" in the first quarter, meaning they're either underwater or lack enough equity for their owners to afford to move.

In Contra Costa County, 46.7 percent of the homes with a mortgage are in this group, Zillow said. In Alameda County, 37.5 percent of homes are; in Santa Clara County, 25 percent; San Mateo County, 24.5 percent; and San Francisco, 19.4 percent.

To be sure, some homeowners who would have had to sell at a loss a few months ago are happy to break even now that prices have risen.

"I have a lot of conversations with some of my clients who are wanting to break even," said Noreleen de Mesa, a broker at Clarin Realty in San Bruno. "A lot of them are still dabbling with the idea, but the majority are probably hanging on to their property, hoping the market continues the route that it's on," she said.

Even though the number of underwater homeowners continued to decline in the first quarter, the housing market "probably won't be back to normal for another five years," Humphries said. "We have gone through this period of enormous volatility, and it is going take a while to get back to normal."

Consumers need to brace themselves for a volatile and unpredictable market, "and need to be making conservative decisions," he said.

The Bay Area's market is moving fast, said Errol Samuelson, president of Realtor.com, and rising prices are quickly propelling more and more homeowners above water again. "It's the hottest market in the country, so it's a little difficult to say where this market is going to be in six months," he said.

Still, the inventory of homes for sale is drastically low, down more than 40 percent in Alameda, Contra Costa and Santa Clara counties, and down 37 percent in San Mateo County, Realtor.com reported.

Median list prices are increasing by double digits from a year earlier, and the time it takes to sell a home has dropped 50 percent or more in many of the counties, the company reported.

"That's not just a seller's market, that is an incredibly hot seller's market," Samuelson said.

Contact Pete Carey at 408-920-5419. Follow him at Twitter.com/petecarey.