>>I bought my second house in 2000 (a modest, 1800 sq ft colonial), with about 10% down and have been paying a little extra on it for 10 years. I’m still easily $50000 underwater.<<
But does it matter? Your house provides the shelter you purchased, irrespective of the price of the next door neighbor’s house. The “underwater” is imaginary.
It matters to the extent that I’m stuck in a failing school district so I have to spend 9 grand a year on private school for my kids. And I’m stuck watching the local HS dropouts sell prescription drugs in the street in front of my house. And demographically there are people who are buying houses for 40 or 50 thousand dollars in my neighborhood that frankly are not in my social class and trash up the neighborhood. And any job opportunity that might require a move would force me into a short sale situation, or worse a foreclosure and all the hassle that goes with that. I get what you are saying, it’s a place to live with a payment I can afford and that it is just a loss on paper but it also restricts my mobility and freedom. And knowing it will stay like this for another 10 years or more is really frustrating.