Gambling on appreciation.

When buyers take outsize loans, they wind up with little or no equity in their homes. The same is true for many people who refinance.

They don't care because they think prices will rise. They'll gain future profits by magic, just as they expected to gain them in stocks.

How smart is it to takes loans against most of the value of your home?

So far, consumers have largely escaped the substantial business-sector recession that's currently going on. Real incomes aren't rising very fast. But thanks to lower interest rates, homes have remained affordable for the average buyer.

As long as prices keep rising, people will feel reasonably wealthy despite the drop in stocks.

But ask yourself -- how good would you feel if you borrowed to the hilt and house prices didn't rise? With little or no home equity, you couldn't afford to sell and pay off your loan.

That last happened a decade ago, in the 1990-91 recession. High-flying real-estate markets plunged.

Whether the current slowdown technically registers as a recession remains to be seen. But businesses are going to keep cutting workers loose. Unemployment, currently at 4.5 percent, is likely to top 5 percent before the slowdown ends. Fewer jobs mean fewer homebuyers. In many hot markets, sales have already slowed.

And what if you're one of the job losers? People aren't finding work as quickly as they did last year. This is no time to be adding to debt.

Best advice for homeowners today:

Hold your borrowing on homes to the traditional 80 percent of value or less.