Homes may become worth less.

[flippinout]

One disconcerting bit of news has come to my attention and that is that by June of this year, 5.1M homeowners may come to find that their homes are worth 75% or less than what they actually owe on the mortgage for that home.

The likelihood that homeowners will reach a point of despair also increases as more homes drop below the value of the mortgages that their owners carry. That in turn makes it more likely that people will hand their keys over to the bank. And troubled banks, particularly regional and community banks, are often not in good enough financial shape to handle mass mortgage defaults, which then puts pressure on the FDIC's resources

It is expected that home values will continue to drop into next year.

And where does this leave flippers? Will it still be worth it to buy an existing home, sink some cash into it to fix it up and then try to sell it? Or will this scenario have very little effect on house flipping?