Divorce and Real Estate Market
Divorce has become the most recent victim of plummeting home values, says the New York Times in its article Breaking Up Is Harder To Do After Housing Fall. Nearly 20% of homes are now worth less than the mortgages owed on them. Where couples once fought over who would keep the house, they now bicker over who will continue to pay for it. As a result, divorce has become more complicated and often more expensive with lower prospects for a money outcome. Some divorce lawyers say that some clients are electing to stay together because there are few assets left to help them start over.
In a normal economy, couples typically build equity in their homes, then divide that equity in a divorce, either after selling the house or with one partner buying out the other partner’s share. But now, more couples own houses that neither spouse can afford to maintain and they cannot sell for what they owe.
In the Dallas Texas divorce arena, we have been spared the worst of the housing bust, but our house values are, by most accounts, remaining stagnant. That still creates the problems mentioned in the article in that houses are not the major cash-cow asset they once were.
