One in five U.S. homeowners with mortgages owe more to their lenders than their homes are worth, and the rate will increase as housing prices drop in states that have so far avoided the worst of the crisis, a new study shows.
About 8.31 million properties had negative equity at the end of the year, up 9 percent from 7.63 million at the end of September, according to the study released Wednesday by First American CoreLogic.
The percentage of "underwater" borrowers rose to 20 percent from 18 percent over that time.
I thought they summed up the reason for the continued freefall in prices quite nicely:
An unwillingness to buy a fast-depreciating asset, a supply glut and swiftly evaporating jobs continue to contribute to the housing market swoon, analysts agree.
"While there is some demand from bargain hunters, housing conditions remain quite dire," Barclays economist Michelle Meyer wrote on Tuesday after the January National Association of Realtors pending home sales index slid to its lowest level since the index was started in 2001.