I really wish people would stop thinking of their primary home as an investment. It's not. It's a liability. It requires maintenance and upkeep and does not generate revenue.
Unfortunately, since -- as you point out -- a home is nearly always a family's largest expense and often also largest store of value, people distort what it means to them financially and expect their home to appreciate in value well above and beyond inflation.
When you take out a mortgage to buy a home, you shouldn't have any preconceived notions about whether or not you'll be "underwater" at some point in the future. And really, it does not matter one bit if you're underwater. Unless something has also happened to your income stream, you just keep paying it, as you should. The borrowed money doesn't somehow magically become less money just because conditions have changed and your home's market value has dropped. The downside is, of course, that you may not be able to sell the house and move away until you've paid off more of your mortgage. But that's a risk you take when you sign that paperwork up front.
The home-as-investment thing is fairly uncommon in the world and seems to mainly be a US thing. I wish it would die, as it should. It only serves to distort the market, and fuels ever-increasing home prices, which makes it continually harder for the average family to own their own home, further increasing institutional ownership.
Home prices as a multiple of median income have increased in many cities outside of the US: London, Paris, Berlin, Hong Kong, the financialization of housing is likely driving a house-as-investment ethos beyond US borders. Some nations, like Japan, are notable exceptions due to local preferences.
Unfortunately, since -- as you point out -- a home is nearly always a family's largest expense and often also largest store of value, people distort what it means to them financially and expect their home to appreciate in value well above and beyond inflation.
When you take out a mortgage to buy a home, you shouldn't have any preconceived notions about whether or not you'll be "underwater" at some point in the future. And really, it does not matter one bit if you're underwater. Unless something has also happened to your income stream, you just keep paying it, as you should. The borrowed money doesn't somehow magically become less money just because conditions have changed and your home's market value has dropped. The downside is, of course, that you may not be able to sell the house and move away until you've paid off more of your mortgage. But that's a risk you take when you sign that paperwork up front.
The home-as-investment thing is fairly uncommon in the world and seems to mainly be a US thing. I wish it would die, as it should. It only serves to distort the market, and fuels ever-increasing home prices, which makes it continually harder for the average family to own their own home, further increasing institutional ownership.