For the house in my example, that means its value has fallen from $ down to $ The household is now significantly underwater because it owes $ on a house worth $ If the household loses its sources of  4  My dating of the onset of the acceleration in land prices (1996) is similar to Robert Shiller’s dating of the beginning of the housing bubble (1997).
See Shiller (2011). BIS central bankers’ speeches  3  income – as might well be true if houses around the country are worth 30 percent less – then it will have no choice but to default on the loan (through a short sale or a foreclosure).