Quote from deepvelvet:
Why would that wipe them out? I know plenty of people with less equity than 30% who would not be wiped out by such a decline. They would continue working and pay their mortgages as they are doing now.
Ok, not they, but their equity would be wiped out. After that happens, they would have no financial incentive to stay in their home and continue payments. Just the opposite, they would have a big incentive to just walk away.
Or can you say with certainty that most of the people you know would continue making their payments even after it would clearly make sense not to?