Want more proof of the awfulness of the housing market? According to Zillow, one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth.

Among the findings:

• Second quarter home prices fell 9.9% from a year earlier resulting in 29% of homeowners getting negative equity;
• Forty-five percent of homeowners who bought at the peak of the market in 2006 are underwater;
• Overall, U.S. home values in the second quarter posted the largest year-over-year decline in the past 12 years;
• The median U.S. home value has not been this low since the fourth quarter of 2004;
• Nationwide, nearly one in four (23.7%) homes sold during the past year sold for a loss while nearly 15% of sales were foreclosures.

These figures are unbelievable. They underscore that the housing market is nowhere near a bottom. The effects of the downturn will be felt for years to come since the biggest asset of many Americans is their home. You have to pity people who are trying to move closer to their jobs because of high gas prices. They are screwed no matter what they do.

"For homeowners who need to sell, this is a gravely serious situation," Zillow's Stan Humphries said in an interview with Bloomberg. "It can also be harmful to communities where the number of unsold homes adds more to inventory and puts downward pressure on prices."

The housing market won't improve until the huge amount of unsold inventory is cleared out, including "spec homes" being put up by builders in the hopes of luring buyers. Things are going to remain ugly for a while.