Generation U: Half of Young Homeowners Are Underwater

Last week, I wrote about the difficulties that young people with student loans can have getting getting a mortgage -- yet one more example of how debt can make it hard to build assets.

Now it turns out that young people who do have homes aren't doing so much better. According a new analysis by Zilllow, nearly half of all homeowners under 40 owe more on their mortgages than their homes are worth.

That makes sense, quite apart from the housing crash, given that young homeowners have had less time to build up equity in their homes and often buy with little money down -- problems exacerbated by the burdens of student debt, which can make it hard for young people to save.

Underwater homeowners are far more likely to walk away from their homes, and foreclosure may lie in the future for many young homeowners. That's disturbing because the poor credit that results will make it harder for young people to buy homes later. Yet, as I pointed out last week, getting an early start in paying down a mortgage is crucial to retirement security in later years.

Too many young people are already trapped in a cycle of debt, and too many older people don't have the wealth they need to retire. But things may yet get worse.