Lowering housing prices will put many mortgages underwater. We are seeing the fallout from this today in CRE and across all properties in 2008.
Today, affordable housing means someone takes a loss. In new housing, the builder or the lender could take the loss but they won't start a project unless they are guaranteed to make a profit, which means the property owner takes the loss.
Deflating prices on existing housing means either the lender (ha!) or the homeowner takes the loss. An additional impact of deflating housing costs is that there may not be any equity for major repairs like roofing or medical expenses.
Today, affordable housing means someone takes a loss. In new housing, the builder or the lender could take the loss but they won't start a project unless they are guaranteed to make a profit, which means the property owner takes the loss.
Deflating prices on existing housing means either the lender (ha!) or the homeowner takes the loss. An additional impact of deflating housing costs is that there may not be any equity for major repairs like roofing or medical expenses.