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Falling home prices may lower the divorce rate

Three or so years in to the economic recession, there are very few people who have not been affected by the high unemployment rate, damaged housing market, and falling home prices. Although unemployment has slowly declined in Georgia and many parts of the country, the housing market has struggled to rebound, with interesting effects on marriage and divorce depending on a couple's situation.

Certainly, financial trouble can put a great deal of stress on a marriage. Because a home is usually a couple's most valuable and potentially wealth-creating asset, it often creates the most financial pressure. When the bottom dropped out from under the housing market, homeowners saw their home values decrease almost overnight, leaving them with very few options and a great deal of frustration and regret. Those feelings can easily manifest into blame, arguments, and disagreements on what to do next.

However, the nature of a falling home price can actually lead to a decrease in divorce. For example, a couple with negative equity may be unable to afford to live apart after selling their home at a loss, or they may not willing to take a hit on their housing investment or credit reports. If that or a similar situation is the case, they may have no other option than to remain together and find a way to work through their problems.

On another hand, a couple who is renting their home may find themselves with more financial freedom as rent prices drop. Lower rents make it easier to divide one household into two, which in turn may increase the probability that a couple on the verge will decide to split.

Source: The Atlantic, "Do Falling Home Prices Lead to More or Less Divorce?" Megan McArdle, 20 June 2011

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