Negative equity can be a problem for people who need to sell their asset but are unable to do so because the amount they owe on it is more than its value. This can make it difficult for them to move or make changes to their financial situation. Negative equity can also be a problem for people who default on their loans, as they may owe more than the asset is worth even if they are able to sell it.

Negative equity is typically associated with falling property prices during an economic recession - for example following the Global Financial Crisis from 2007-2010 and beyond.