Some experts say the housing market has bottomed, but one statistic indicates otherwise.
The portion of U.S. homeowners who are “underwater” on their loans — that is, they owe more on the mortgage than the home is worth — surged to 23 percent in the third quarter, or almost 10.7 million households, according to First American CoreLogic, a real estate research firm.
Many of the underwater homes will end up in foreclosure or on the already bulging market of homes for sale.
Of the 10.7 million homes underwater, nearly half have a mortgage that is at least 20 percent higher than the home’s value, according to First American.
More than 520,000 of these homeowners are in default on their mortgages.
This "is an outstanding risk hanging over the mortgage market," Mark Fleming, chief economist of First American, told The Wall Street Journal.
"It lowers homeowners' mobility because they can't sell, even if they want to move to get a new job."
Some homeowners who are underwater are fully capable of paying their mortgages, but are ditching their homes anyway — to the tune of 588,000.
On the positive side, home prices rose in September for the fifth straight month, according to the S&P/Case-Shiller price index.
"We're seeing more consistent signs of recovery," Gary Thayer, chief macro strategist at Wells Fargo Advisors, told Reuters.
"But high unemployment and foreclosures are still problems for the housing market. So we're not completely out of the woods.”
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