According to figures released Wednesday by the real estate data provider Zillow nearly one-quarter, or 23.2 percent of U.S. homeowners with a mortgage were underwater meaning they owe more on the home than it is worth, the highest it's been since Zillow began tracking negative equity in 2009.
The subtle hints of stabilization in home values that started emerging earlier in the year began to diminish last quarter.
"While not unexpected, the unceasing declines in home values signal that we're in for a long, bleak winter of continued troubles for the housing market," said Dr. Stan Humphries, Zillow's chief economist. "The length and depth of the current housing recession is rivaling the Great Depression's real estate downturn, and, with encouraging signs fading, will easily eclipse it in the coming months."
With home values declining again, more and more homeowners find themselves sinking deeper and deeper into mortgage debt.
In some hard-hit markets, such as Florida, as many as four out of five single-family homeowners with mortgages were substantially underwater in the third quarter.
"The high percentage of homeowners in negative equity continues to be troubling, in that it represents a huge number of people who are not only more vulnerable to foreclosure, but who are essentially trapped in their current homes and are prevented from selling and buying a new home," according to Dr. Humphries. "This has profound implications for future demand and will be a millstone around the neck of the housing market."
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Zillow says foreclosures have reached a new all-time peak, with 1.2 out of every 1,000 homeowners in the country losing their homes in September.
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