NEW YORK - November 8, 2011 - A new report on still-falling home prices highlights the fact that the lower those prices go, the more Amerikan borrowers fall into a negative equity position; that is, they owe more on their mortgages than their homes are worth.

Most analysts will tell you that negative equity is the number one problem in the housing market today, even worse than foreclosures, because it causes foreclosures, stymies consumer spending, and traps potential home buyers and sellers in place.

Negative equity rose to 28.6% of single-family homes with mortgages in the third quarter of this year, according to Zillow. That's up from 26.8% in the second quarter. In real terms, that's 14.6 million borrowers.

Many of those borrowers are already behind on their mortgage payments, and some are likely already in the foreclosure process. The rest of them are in danger of defaulting, not because they can't pay their mortgages, but because they either won't want to (seeing as they will never see any real appreciation in their investment) or because any change in their economic or personal situation might force them into default (change of job, divorce, etc.).

While 14.6 million borrowers might seem like a lot, it's not the real number when you consider negative equity in housing's recovery. That's because it doesn't factor in "effective" negative equity, which is borrowers who have so little equity in their homes that they cannot afford to move.