23% of Homeowners Owe More Than House Is Worth

A report estimates that 10.7 million U.S. households have negative equity

New data estimate that 23% of U.S. homeowners owe more money on their mortgages than the home is worth. That's about 10.7 million households with negative equity--a grim statistic. Here are in-depth looks behind the numbers.

• It Gets Worse Barry Ritholtz of the Big Picture explains: "There are 5.3 million U.S. households with mortgages at least 20% higher than the home's value. And it gets worse, depending upon the vintage of the mortgage. During the boom, appreciably worse: Of those who took out mortgages at the 2006 peak, more than 40% are under water."

• New Methodology The Business Insider's Henry Blodget says the statistical methods have changed. "First American CoreLogic, which estimates the numbers many media outlets use, has changed its methodology from the last survey. It now no longer assumes that home equity lines of credit have been completely drawn down (fair), and it credits payments that mortgagors have made to pay down their principal (duh). The net result is that the housing situation looks better than it did a few months ago. Still bad, but better."

• Fuzzy Math Douglas A. McIntyre of 24/7 Wall Street doesn't buy it. "There have been a number of attempts to come up with a figure about how many U.S. home mortgages are underwater -- in other words, the value of the home loan is more than the value of the house. All estimates are bound to be wrong because no one has had the time or money to appraise every house in America and match it with the value of its mortgage plus any second mortgages."

• ..But If It's Right McIntyre elaborates at AOL News site Daily Finance. "The data makes two salient points: 1) Negative equity and near negative equity mortgages account for nearly 28% of all residential properties with a mortgage nationwide, and 2) The rise in negative equity is closely tied to increases in pre-foreclosure activity," he writes. "The news about underwater real estate is nearly as bad for banks as it is for homeowners. Default rates and foreclosures will almost certainly continue to rise. Banks will end up owning more and more properties that they are ill suited to sell"