One in three Contra Costa County property owners continue to make payments on mortgages higher than the value of their homes, according data published by listing website Zillow.

During the final three months of 2012, more than 56,000 homes in the Bay Area went above water while 205,986 homes were still in negative equity. Although that number is down 41.3 percent from last year, negative equity has kept thousands of homes off the market, forcing buyers to compete for short sales.

Underwater mortgages and short sales -- those where the homeowner sells at a loss -- were especially common in east county, realtor Jim Walberg of Keller Williams Realty in Danville told reporters at KCBS. Still, the San Ramon Valley and surrounding cities in the Interstate 680 corridor are thriving.

"It's very neighborhood specific," he said. "From Orinda down to San Ramon, that particular corridor probably never has been healthier in the last seven years."

Still, the report states that 40.29 percent of homes sold countywide in December 2012 were at a loss, a 9.2 percent improvement from the previous year. Approximately 36 percent of Alamo homes sold in the same period were at a loss, while 24.55 percent of Danville homes and 42.55 of San Ramon homes were also sold at a loss.

Zillow's report showed Alameda County with 25.4 percent of homes underwater. San Francisco had the fewest negative equity properties, with only one in 10 underwater mortgages.

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