Sales have declined in recent months nationwide. In a slack period, the conventional wisdom might blame the recent slowdown in home purchases on rising mortgage rates. There's actually a different threat to the economy that has some people worried about the bigger picture. When the housing market went bust in certain regions, homeowners saw their home equity collapse. More homeowners took the hard way out and let lenders foreclose rather than continue paying a loan that was higher than the value of their home.
Some economists note the risk of another wave of foreclosures.
Because of the popularity of home equity loans and zero down payment and low down payment loans, more Americans have more debt and less equity in their homes than a decade ago.