There are people who, though they paid a lot more for their house than it is now worth, have not experienced any decline in living standards since the crisis began.3 As a result, the increase in negative equity for owner-occupiers is not a reliable indicator of stressed living standards.
The starting point is to identify the nature of the problem. The reversals of capital flow had all the hallmarks of a bank run - the sudden change of opinion and the perfectly rational desire to get out ahead of the crowd (or at least not to be left behind).