The Wall Street Journal has a great article today titled “Housing Pain Gauge: Nearly 1 in 6 Owners ‘Under Water’ “. It’ an overview of the current state of housing in the country. It’s not pretty.

The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults — the very misfortune that touched off the credit crisis last year.

The result of homeowners being “under water” is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.

And having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for borrowers in financial trouble to refinance or sell their homes and pay off their mortgage if their debt exceeds the home’s value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood.

A brief snapshot of the state of home prices in major metro areas. Our own Phoenix has seen a 28.9% drop in home value since the peak (June 2005):

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