The effect of real estate equity on your marriage; "Real-Estate-Enabled Divorce"

A little known side-effect of raising housing values over the past decade is something called "real-estate-enabled divorce." According to divorce lawyers and other professionals in the divorce field quoted in a recent New York Times article on this trend, couples with weak marriages are using appreciated home values to underwrite their splits. The thinking is that with increased equity, wives may think that there is now enough money to live on in a manner that they like while the husband might see the equity as a guarantee that they'll be able to maintain a desired standard of living even after alimony payments. Without this additional equity, the thinking goes, some of these marriages would have stayed intact.

“Money is freedom,” said one person interviewed by the Times. “I don’t need the mansion. We made enough money to be able to get divorced and support two households.”

The Times noted that economists have observed this tendency before and that any time a couple experiences a drastic rise (or decline for that matter) in net work, then the risk of divorce increases as well.

In addition to being able to better afford divorces from troubled marriages, rising equity value can increase the likelihood of divorce in that the parties may now feel that they have the financial resources to "trade up on their spouse. They feel emboldened that they can do better.

Of course not everyone who obtains a financial windfall experiences divorce (the majority don't) and some use their newfound resources to strengthen their marriage through counseling or other things. The Times piece was clear that the problem marriages didn't start with the money and that the ones that ended up in divorce were troubled to begin with.

The complete article can be found here.