However, the housing crash has meant a huge percentage of people are now in negative equity.
For homeowners, negative equity makes houses more like a trap than a piggy bank.
That would crystallise their negative equity, scuppering their plans to trade up or move on.
Obama has failed to succor the 20% of home owners still carrying negative equity on their homes.
In other words, the bank fears a house price crash that leaves homeowners trapped in negative equity.
In the fourth quarter, Zillow determined where American homeowners freed from negative equity in 2012 were located.
FORBES: 2 Million Americans No Longer Plagued By Negative Equity
As a result, negative equity will remain a major factor in the market for the foreseeable future.
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If negative equity is the real problem, principal will have to be reduced to stem the foreclosures.
This overhang holds down prices, meaning that the road out of negative equity is a long one.
Foote et.al (2009) argue that negative equity is merely a necessary but not a sufficient condition for default.
However, while the rate of negative equity is higher in younger age brackets, the delinquency rate is noticeably lower.
Borrowers with high negative equity are also many times more likely to default.
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With house prices still falling, many borrowers would soon have negative equity again.
"We live in a modest three-bedroom house which is in negative equity and we will lose our house, " she said.
And millions of American households will remain caught in negative equity, making it hard for them to contemplate a move.
House prices have halved since the Ireland's property market peaked in 2007, leaving an estimated 400, 000 mortgage holders with negative equity.
In late August, Zillow released its second quarter Negative Equity Report.
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Consumers worried that renting means losing out on building equity should beware of "negative equity" when a housing market goes bad, Tully says.
Moreover, in addition to the 25% of homeowners with negative equity, a similar proportion have insufficient positive equity to refinance their high fixed-rate mortgages.
In this rare type of recession, monetary policy is useless because people with negative equity will not borrow, no matter what the interest rate.
Over the course of 2012, nearly two million homeowners were freed of negative equity on their homes, according to a Thursday report from Zillow.
FORBES: 'Seller's Market' Developing As Housing Inventory Hits A 13-Year Low
The number of homeowners with negative equity in Iceland is growing.
As values rise, approximately 1.3 million homeowners nationwide have been lifted out of negative equity in the third quarter compared with the second quarter.
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They either have negative equity or insufficient income to make payments.
This suggests that while negative equity and delinquency are most common among peak-bubble purchasers, these borrowers are not significantly more underwater than purchasers in earlier years.
Still, despite more than 1.9 million homeowners nationwide finding their way back above water last year, 13.8 million American homeowners are still struggling with negative equity.
FORBES: 2 Million Americans No Longer Plagued By Negative Equity
Looking across the whole sample also reveals something interesting about the nature of negative equity and delinquency, namely that delinquency is relatively abnormal among underwater borrowers.
"You are taking people in negative equity, pushing more money down their throat to back an asset that is still going down in value, " he said.
If anything, the Obama administration flubbed its opportunity to stimulate housing by succoring poor, disenfranchised homeowners carrying negative equity on their property these past skinny years.
Negative equity is most common among homeowners who purchased their homes in 2006 and 2007, with about 53% of borrowers who purchased homes in those years underwater.
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