Upside Down and Falling Apart

March 25 (Bloomberg) -- California home prices dropped 41 percent last month from a year earlier, more than double the U.S. decline, as surging foreclosures drove down values, the state Association of Realtors said today.The median price for an existing, single-family detached home in California sank to $247,590 in February from $418,260 a year earlier, the Los Angeles-based group said in a statement. The U.S. median price fell 16 percent during the same period, the second-biggest drop on record, according to the National Association of Realtors.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aRhTT4MNBjlM&refer=home

Think of the wave of people in upside down mortgages in California. Would you stick around and pay an extra few hundred thousand on a house you bought in the last few years? Or decide that since you're not allowed to declare bankruptcy on credit card debt, but can walk away from a mortgage, you'd go rent an apartment across town and then mail in your keys?

Because that's what that crappy bankruptcy law they passed a few years ago requires borrowers to do.
Multiply that ripple effect, then add in the rest of the country, then think about how many folks bought more house than they could afford.
Back in 1999 when we bought our house, they kept asking us if we wanted to borrow more money.
They wanted us to borrow 150 grand instead of the 90 grand we took out. We'd be fucked right now, spending a huge percentage of our income on houses, no cushion, one or two paychecks away from being on the street.
But most people don't think that way. All they think about is how nice it would be to have a lot more room for junk they bought with either a home equity line of credit or with one of the thousands of credit cards pushed onto people who grew up thinking owing money was not a bad thing. The days of consumer culture and easy credit are over, at least for a while.