After a housing slump that has pushed values down 30% in some areas, roughly 12 million households owe more than their homes are worth.
By The Wall Street Journal
The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults -- the very misfortune that touched off the credit crisis last year.
The result of homeowners being "under water" is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.
And having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for a borrower in financial trouble to refinance or sell a home and pay off the mortgage if the debt exceeds the home's value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood.
........ The declines have made homes more affordable, bringing prices in many areas closer to their long-term relationship to incomes. .......
http://articles.moneycentral.msn.com/Banking/HomeFinancing/nearly-1-in-6-homeowners-underwater.aspx
