23% of mortgaged homes are underwater

According to CoreLogic, the number of underwater mortgages is rising again:

More homeowners fell underwater at the end of last year as home prices continued to drop in markets across the country.

CoreLogic reports today that 23.1% of residential properties with a mortgage were underwater, or were worth less than the amount owed, at the end of the fourth quarter. That’s up from 22.5% in the third quarter. That represented a rise from 10.8 million to 11.1 million borrowers underwater from the third to fourth quarters.

The report underscores one of the biggest risks facing the U.S. economy as home prices resume their decline: More homeowners risk being trapped in homes that they can’t easily sell if they want to move for jobs or if they run into trouble making their loan payments. These borrowers will be a drag on the “trade up” part of the housing market, leaving sales more dependent on first-time buyers and investors.

“Until the high level of negative equity begins to recede, the housing and mortgage finance markets will remain very sluggish,” Mark Fleming, chief economist with CoreLogic, said in a statement.