Negative Equity is a term used to describe a state in which the outstanding balance on a loan is more than the actual value of the asset. For example, if you have a housing loan with outstanding balance of $500,000, but the price of the house has fallen say to about $400,000.
According to estimates in this article, as mentioned by CR, currently the negative equity is estimated to be around 12 million. !! The population of US is around 300 million. Lets say we have an average of 3 to 4 people per house. So we actually have about 80 million to 100 million families in the US. and 12 million homes, i.e. about 12% to 15% of the families are now facing the situation where the price of their house is less than their mortgage. This just gives us a glimpse of how deep and serious the housing problem in the US is, and although bailing out banks may have been the right move, how far it is from actually providing a healing touch to the US economy.
In UK, negative equity is expected to reach 2 million. The pouplation of UK is about 60 million, which means about 15 million to 20 million families. Thus housing in UK is also in a mess with around 10% to 15% families with more mortgage than their home values.
Would have loved to see numbers in India.