It hurts people who own their homes, but haven't paid off their mortgages yet, becuse it means that they can't afford to sell -- so they're pinned in one place because they can't move. If the current market value of their home is less than the amount they still owe on the mortgage, then they'd need to make up the difference in cash if they want to move.
It also hurts people who own their homes, and want to finance a major addition by taking out a second mortgage. All of a sudden, that second mortgage won't pay nearly as much -- and just because housing prices have dropped, doesn't mean that construction costs have dropped with them. (They'll drop a little, but not as much - and there's a lag time on price corrections. For example, the housing market slowed several months before housing prices finally started dropping.)
![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
no subject
Date: 2006-12-16 02:32 pm (UTC)It also hurts people who own their homes, and want to finance a major addition by taking out a second mortgage. All of a sudden, that second mortgage won't pay nearly as much -- and just because housing prices have dropped, doesn't mean that construction costs have dropped with them. (They'll drop a little, but not as much - and there's a lag time on price corrections. For example, the housing market slowed several months before housing prices finally started dropping.)