Underwater Residential Real Estate

One of the confounding narratives many folks cling to today is that real estate somehow transcends the universal laws of economics (or maybe even physics for that matter). Despite glimmers of light in certain markets, overall somewhere between 1 in 5 and 1 in 4 houses with mortgages are worth less than those mortgages. I was surprised to learn that around 50 million homes in the U.S. are subject to a mortgage. If home prices continue downward (as appears likely in many/most locales), these ratios change exponentially to the downside. We could well be looking at 1 in 3 or 1 in 2 underwater. Not good.