A 25ft (7.6m) wide hole opened up beneath a 100-year old building in Magdalens Close in Ripon on Monday evening.
Firefighters rescued a dog from the property, and the police immediately sealed off the area and removed the inhabitants of the adjacent houses in the fear that a precariously-leaning brick wall could fall at any time.
That brick wing, which is around 30ft (9m) high, continued to move overnight, and is still being monitored closely to avoid any further damage.
Police officers have gone from house to house to warn neighbours about what happened, but the British Geological Society has warned that Ripon is one of the most at-risk areas for sinkholes in the whole country.
Earlier this month, Harrogate Borough Council rejected a proposal to build 75 homes on a nearby abandoned auction mart site because of fears of possible subsidence.
Local residents have confirmed a long-standing problem with gypsum-related subsidence in the area, which has caused other homes to collapse in the past.
Emily Moon, who lives opposite the rear of the affected property, said: “It’s a bit of a shock, really. It’s definitely widened since first thing this morning. We’ve been aware for quite some time that there’s a gypsum problem in this area.
“You can’t see the hole from here - just the poor house splitting in two. It’s a worry for us residents, really. We’re assured that our buildings are safe. But it’s a bit close for comfort, really.”
Stuart Martin, who is the local Tory councillor on Harrogate Borough Council, has spoken to the residents of the affected house and outlined their shock at what happened on Monday evening.
Mr Martin said: “They were very distressed and just want to get some sort of normality back into their lives. My thoughts go out to them. It must be tremendously worrying at this point.
“I’m a little bit shocked by what’s happened. Surprised? Perhaps not, because there is a history in Ripon of gypsum dissolution. Whether this is actually down to gypsum, I don’t know. I think it’s too early to say, but I suspect it is.”
The British Geological Survey has said that the most susceptible area in the UK for sinkholes is the Permian gypsum deposits of north-east England, particularly around Ripon. Gypsum is more soluble than limestone, and thus dissolves more rapidly.
The sinkhole is believed to be the sixth to have opened up across built-up areas and transport routes in England this month.
A house and three flats were evacuated after a crater opened up in a back garden in Croxley Green, near Watford on Sunday, while 17 homes were evacuated after a 35ft-wide and 20ft-deep hole appeared in a cul-de-sac in Hemel Hempstead.