Ha..ha.. it is not a house under water but the terms used for a house which is still had loan but the value of the house is less than the loan. Or in other term, negative equity.
40 to 50 years ago when all this started, a house definition as a place to raise a family had changed to an investment. Most was brainwashed that you must own a house - the mad rush open an opportunity for the banks to make billions of profit. Soon after the demand taper off, all sorts of creative financing came out and now we are seeing the effect. Good luck to Gen Y!
Some interesting comments.......
...Too many people think that they have the have the best of every thing
(like it's owed to them) big house in a great neighborhood, fancy new
car, etc. (called keeping up with the jones) Buy well within your means
& you won't have all of the financial problems that the other people
have!!!!!!!!!!
...People look at a house as an investment and not what it is. A place to
live and raise a family for the next 30 years. Also, just like any
other investment, there is always a possiblity you will lose money.
...Because you all keep voting for politicians that love deregulation which
ONLY benefits bankers and corporations because they tell you thats
socialism and you believe them. Our founding fathers put it right in the
constitution that the government has the POWER to REGULATE business. To
protect you all from exploitation. So deregulation is actually
anti-american and against the founding fathers wishes.
...three things made this perfect storm home buyers with over blown
expectations, easy government money and banks wanting to make a ton of
money. I was raised the old fashioned way that a house is the place
where you take care of your family not a cash cow. In the "old days"
bank made conservative loans to people who could afford a loan without
any "creative lending" and the government regulated this process instead
of pushing to get everybody in a house.
...Banks want people to go into debt. That's how they make their money. Don't be fooled...buy what you can afford and you won't become a slave to the bank system.
...When we bought our house in 1999, the bank tried to tell us that we
could afford a much more expensive house. We didn't listen to them. They
also told us we only needed to put 20% down. We didn't listen to them. I
know so many people who did and they are sorry as hell now! Never have
trusted banks and I certainly won't start now.
If this is happening in America, don't think it will not happens in other parts of the world. Google "ordos".
If you ask how could the man on the street win in this game? I would say do not take too much loan and be in slave to the banks for whole of your life. If you can afford to pay off your loan - don't delay, do it today. If the economy came down crashing, you will have a peace of mind because no one can come and hassle you. Being free is the best feeling - The banks, the government, the developer can continue with their creative ideas - I'm just not participating.