Last week, Deutsche Bank analyst Karen Weaver published a report that shook up the "housing is recovering" crowd. She predicted that, by next year, nearly half of American homeowners with mortgages will be underwater.

Before we go into the details, here's a basic refresher on the US housing market:

There are approximately 110 million households in the U.S.

About 75.5 million of these are homeowners.

Approximately 68% of the 76 million, or 51.6 million, have mortgages.

14 million U.S. homeowners, 27% of those with mortgages, were underwater at the end of Q1 (DB estimates)

DB estimates that nearly half of the 52 million mortgagors will be underwater by the end of next year.

(Note that this is half of those with mortgages, not half of all households)

DB's estimates are based on city-level projections of where house prices will bottom. DB made these projections before the startlingly good Case Shiller numbers last month. If the Case Shiller numbers herald a recovery, as many bulls suggest, then DB's "underwater" forecasts may be too aggressive.

On the other hand, if the June Case Shiller numbers were just a head-fake, as we and other analysts suspect, then DB's estimates will probably be right on the money.