Nor should they sell. Nobody should be concerned about people who got in at the beginning of the upswing. That is, unless they were among the sheeple who refinanced 6 times in the 9 years since they bought it. Those people who did that may not have much choice in the matter.

Incidentally, the people who bought in 1989 didn’t make it back from being upside down until 1998 or so. Whether they booked the loss or not, they were upside down and paying a lot more on their mortgage than they would have paid for the same place had they rented it. Same thing applies right now.

We don’t even know how long it will take to get that house back to $900k. It could be easily 15 years, not 4. Maybe even longer. The next swing might bring a $285k average (at the low point of the cycle) back up to only $400k or so, not $560k. With this massive distortion we are now in uncharted territory. There is the possibility that this next time really will be different, but not in a good way.