Recently, real estate website Zillow.com released figures from a study they made which indicate that the figure of homeowners currently paying higher debt mortgages than the worth of their homes at 20%. That roughly estimates to 20 million U.S. home owners.

These homeowners are in the unenviable position of being “underwater” or having “negative equity” in terms of home mortgages. This means that, if these homeowners were to sell their homes, they would actually have to pay money for their property to be sold. This sad state of affairs is the result of the sharp drop in real estate prices that the country has been experiencing these past few months.

The extent of the damage varies. The most hit areas include Stockton, California with an estimated 51.1% of homeowners are facing negative equity. In Modesto, California, the numbers are lower, but not by much at 50.8%. One of the worst hit state in the country is Las Vegas with an estimated 67.2% of homeowners own properties that are hardly worth the mortgage that they owe.

Vice president in charge of data and analytics in Zillow, Stan Humphries stated that, “A combination of falling prices and low down payments has left many borrowers underwater. In some markets, more than half of all homes are in negative equity.”

Humphries further elaborated that homeowners with negative equity are finding themselves in a very risky situation. Without a reliable financial buffer, any unexpected emergencies involving money, such as medical bills or unemployment, can severely stress their finances. In extreme cases, these homeowners would be facing foreclosures.

The data used in the study conducted by Zillow.com came directly from their own home price estimates. These estimates are obtained by collecting records of sales and using the current price trends for the other homes in their target communities. The home price estimate figures are then compared to the initial loan balances of homeowners. This will then show whether the homeowner has a negative equity property.

Zillow.com’s analysis takes into account the mortgage balance of the homeowner upon purchase of the property and the changes in the price of the property since then. It does not take into account the possibility that homeowners may have already paid the principal amount.

Humphries stated that the analysis is actually quite conservative. According to him, the trend for homeowners have been to remove value from their properties by taking home equity loans and other credit lines against it rather than adding to its value through paying up the mortgage of the property.

Not all industry experts support Zillow’s findings, however and the real extent of the damage from the property market crisis is still up for debate.