Does anyone really lose money on a house? Think of it this way; a person buys a house for $500K and they sell it for $300K, oh by the way a $500K house in San Diego is really worth only $300,000 if you consider the average household income to be commensurate with the price of a home. It may look as though the person lost $200k, but we all have to live somewhere. So the person takes the $300k and buys his or her next home. The person still owes $500k, but still holds on to a comparable property. The good news is that the avaricious state can now collect only the property tax burden on $300k not $500k. People may laugh at my analogy, but if you circumscribe it to a situation where the homeowner owns one home for the purpose of living in it and maybe even paying it off someday, it makes sense. Remember; when prices fall they all fall in a given location. If one $500k house falls to $300k so do the rest of the $500k houses.
