President Obama and prominent lawmakers met yesterday in an attempt to reconcile a healthcare bill that has dominated headlines and national politics for over a year. And when lawmakers aren’t debating healthcare, their attention has been turned to job creation. Unemployment numbers, countries facing financial collapse and the continued efforts to mend a plagued system, dominates news on the financial crisis, which the majority of Americans report is their most pressing concern. Amongst this whirlwind of activity that has only been stoked by the media, one sector seems to have been overlooked as of late: the housing market. This is somewhat ironic, as the housing market is the very thing that brought us to the precipice of financial collapse in the first place.

During efforts to put a band-aid on the bleeding and create new jobs, the housing market’s stagnation seems to have been ignored by everyone expect the most prudent and diligent market analysts and observers. The tax credits that were extended into this year drove home sales for a time, but their influence is beginning to wear off. Much to the chagrin and surprise of analysts, the housing numbers released today paint a bleak picture for the prospects of a timely recovery. Sales of new homes were at a record low in January, which marked the second straight month of decline. The National Association of Realtors reported that sales fell 7.2 percent, substantially lower than expectations.

After the economic collapse, there was a huge surplus of homes without enough buyers to match the supply—and that trend hasn’t changed. The problem has only been exacerbated by the fact that droves of people are walking away from their mortgages. It used to be that people only walked away from mortgages as a last resort, but now defaulting has become a strategic move for money Americans.

As housing prices have tumbled since the financial collapse, the number of people who are “underwater” on their mortgage has skyrocketed. Being “underwater” indicates that people not only have zero equity in their home, but they actually owe more money than there home is worth. In the fourth quarter of last year, the number of people underwater in their home was 11.3 million, a startling 24 percent of all homeowners. For many of these people, paying off the mortgage has not only become a strain financially, it has also become a losing proposition. In many cases, these people are not a few dollars underwater either.

“We are 45-50 percent under water,” said Wayne Bryant, a 61-year-old who works in airport management. “At this point we are 20 years away from being even. We’re walking away because it’s a good business decision.”

While defaulting on your mortgage will wreak havoc on your credit score for at least the next three years, the money that is saved from futile mortgage payments more than compensates in many cases, such as Bryant’s. A report by First American Core Logic says that the tipping point for homeowners seems to be when negative equity hits 25 percent or people owe $70,000 more than the home’s value. For many people, defaulting on their mortgage has been cause for shame, but that stigma is beginning to wane. People are now willing to walk away to save their financial situation, and as more and more people do so, the act is becoming increasingly socially acceptable.

Banks and lending agencies, who obviously would rather have mortgage payments than a slew of homes that have been defaulted on, are saying that people strategically walking away from their homes are creating a moral hazard for their neighbors and the economy, putting more homes into an already saturated market. The irony in this is that corporations walk away from commercial loans on a regular basis, using similar reasoning.

When a company is underwater in their commercial real estate, they simply turn in the keys and cut their losses. For businesses, this is viewed as a sound—and correct—business decision. Now that they are having the same thing happen to them, however, corporations are vilifying private individuals who take part in the practice.

So is it ever acceptable for people to walk away from a legal contract when they are more than capable of upholding it? That’s really a personal decision; the fact of the matter is that the high rate of foreclosures is only perpetuating an already dire problem. Unless we do something soon to repair the housing market and reform the financial practices that brought us to this place, there is little hope for the economy to stabilize as a whole.

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