Is that "value" real though if nobody will actually pay for it at that "value"? The only thing that is real about that "value" is the property taxes assessed. Also, if you're not actively trying to sell the house, the "value" is meaningless. Unless you're trying to get some sort of loan against the equity, it's just a number on a paper like most of modern finance
If you took out a loan on a meaningless value where the value is later "corrected" to a more sane "value" that forces one to be underwater is not anyone else's fault but the person taking out the mortgage at the higher "value".
Just because someone doesn't have a mortgage doesn't mean they magically have free money. More than likely, they paying rent. Unless you're a zillenial that's moved back in with the parental units, but that's a tangential conversation.
> Just because someone doesn't have a mortgage doesn't mean they magically have free money.
I'm talking about people who have paid off their mortgage. They can re-mortgage their house, which would make a large sum available to them right then and there. I've even heard of people doing this when a house gains value: "extend" the mortgage, which gets you the gain of the house value in spendable cash ...
(and I definitely agree that's a horrible, terrible, no-good, even potentially financial-system-destroying idea, but people will, 100% certainly, do this)
> If you have a mortgage, it is so meaningless it can bankrupt you.
Not sure what this means?
Once you have the mortgage, if you can keep paying it you're fine. Whether the house value on paper is higher or lower doesn't make any difference.
My house has twice gone down in paper value below what the mortgage balance was at the time. As long as I want to keep living there, that doesn't mean anything.
