The latest development in the rapidly deteriorating housing market is the news that many homeowners now have mortgages that are worth more than the value of their homes. These owners, granted 90 to 100% mortgages at a time when bankers were more than happy to give away cheap money, have found themselves in a situation where paying off their mortgage would leave them significantly out of pocket.

The BBC reports today that 3 million people are now living in negative equity.

There are also reports that some homeowners in America are actually abandoning their homes to repossession because, while they can afford to keep up on their mortgage repayments, if they continue to do so it will end up costing them much more than their property is worth.

Despite the falling house prices, there are fewer first-time buyers than ever before. Thanks to increasing mortgage rates and unstable house prices, this year could see the lowest number of first-time buyers on record, creating a knock-on effect damaging the entire housing market. Read about it here.

The brave new world of the New Olympians - the ideas and actors behind the current financial chaos - has now been exposed, but in London the Olympic dream is also crumbling fast. Plans to build the Olympic village for 2012 are now in jeopardy as the credit crunch and sliding housing market means that - once again - taxpayers may now have to step in to cover the extra costs. read the full story here.

We’ve all heard horror stories about first-time buyers being outbid – ‘gazumped’ – at the last minute by someone with a higher offer, but now housebuilders are suffering the same treatment from buyers: read Dan’s article about ‘gazundering’ here.

‘The timing of Bernanke’s comments is important: there is a concerted effort by the Fed, the US treasury and the White House to talk up the value of the dollar in order to lower the cost of imports - especially oil - and to boost consumer spending power.’ Read Larry’s article on why Ben Bernanke, chairman of the Federal Reserve, may be too optimistic about the USA’s economic future.

The economic slowdown has been developing for a while. In this NBC report, Mort Zuckerman, the American real estate billionaire, sees America as being in ‘about the fourth inning of a nine inning ball game.’ Interestingly enough, the interviewer sees it as a ‘perfect storm’.

In Chapter 9 of The Gods that Failed, Larry and Dan point out the strange frequency of the phrase ‘perfect storm’ in the media - no longer just a meteorological term, it is now the official tagline of crisis in general.

 ‘The state of the global economy in the first half of 2008 made it a prime candidate for the “perfect storm” thesis… As the chief economist of the International Monetary Fund, Simon Johnson is hardly one for apocalyptic visions of the future, but in November 2007 he popped up to warn of a “perfect storm” caused by the interaction of turmoil on the financial markets and the spiralling cost of energy.’

Today, Larry Elliott and Ashley Seager report on Mervyn King’s admission that we will see more ‘turmoil in the markets,’ and his plan for improved regulation. And it seems the storm is spreading to the rest of the world. In South Africa, the national Times reports a ‘near perfect storm in housing.’

The imminent collapse of the housing market brings the threat of a wider market crisis of low demand and high inflation. Read Larry’s article here.

The Telegraph reports similar fears, with factory charges up 8.9% since last year. Read the full article here.

Today the Centre for Economic and Business Research announced that it predicts up to 15000 job losses among estate agents alone. Read the article on ThisIsMoney.

In chapter 6 of The Gods that Failed, Larry and Dan discuss the importance of the housing market as an indicator of the wider economy:

‘…part of the economy - the housing market - certainly seemed to be on the slide; the influential Halifax house-price index’s fall of 1.1 per cent in November was its third monthly decline in a row. Housing finance is the most important expression at the household level of the City of London’s vast credit machine, thus it was unsurprising that the credit crunch that followed the so-called subprime lending crisis of 2007, which we cover in detail elsewhere, should have choked the supply of funds for mortgages.’

Now, house prices are falling at their fastest rate since Halifax began keeping records in 1983. Read Larry’s article here.

The New Statesman has one key piece of advice for its readers: don’t buy now. For the full article, click here.

Tomorrow, Britain’s housing industry will call for inflation cuts to prevent the economy from slowing dramatically. Read Larry’s article here.

This comes after new research has shown that a quarter of young working households can’t afford to buy their own homes. See Citywire’s article for more.