housing prices will rebound, but the treasury and fed reserve needs to liquidate the bad debt and take the market correction for housing to come back. they keep proping up failing institutions through QE1, QE2, and now worldwide QE3 with the concerted efforts of all the central banks. See what they don't want ot admit is those credit default swaps are still held in mass by the euro banks. they also need to reinstitute the 20% minimum down payment like back in the 80's. this eliminates the riff-raff that cannot afford the house they are trying to buy ( before you call me a bigot or racist, 20% minimum down does not disadvantage any one sector of society)

small houses are the way to go. there is no need for a 6k sq foot house for a family of 4, its tons of wasted space.

Time we started thinking of homes as places to live and not ATMs.

and why is this "distressing" exactly?

home price was inflated to absurdity for a decade thanks to socialist government interventions and the @ss @!$%#ing done by the bankers, now it's being auto-corrected by the law of supply and demand so the average person can afford a house once again. so what's alarming about this??

if by "distressing" you mean the greedy losing their investment and loan officers no longer making $500k a year then BOO FREAKING HOO!!!!!

but before ending this post, i'll leave you with an entertaining fact; Japan's housing bubble took TWO DECADES to recover. on top of that their debt was mostly owed to themself and it was no where near our astronomical amount. so yep, may you greedy bastards enjoy another 2 decades of "distressing."

Housing is not going to recover till people's incomes recover. Furthermore housing has been entirely too expensive for too long. It used to average less than 30% of household after tax income. It's ballooned upwards of 50% for some families. People don't want to work for their homes anymore.

Look at Japan and you will know exactly where our house prices are going. Japan home prices have gone down for the last 15 years+.

I guess whether or not it's distressing is who you are. If you bought a house when prices were high, then yeah it's distressing. But if you are a family looking to buy a home to live in, then lower prices are a very good thing. I agree with the earlier poster that we are better off if people buy homes to live in rather than to buy and sell as investments. Home prices were over inflated, which hurt those with modest incomes looking to buy. As far as I am concerned, some drop in prices is a very healthy thing.

This is exactly what needs to happen. Housing prices were inflated to begin with.

Good point and a point that I tried to make almost 15 years ago when home prices across the country and especially here in Colorado were just skyrocketing through the roof I had said 'We will soon reach a point where the basic simple starter home is out of the reach of the average first time home buyer due to both the over inflated values of homes combined with the fact that for the vast majority of Americans, salaries and wages simply weren't keeping pace with over blown home valuations.'

The far better situation and its the direction that we need to steer this country and the market in is towards an environment where wages increase somewhat as home values continue to adjust until we reach a point where the "average American" who is working hard and doing all the 'right things' can once again have home ownership within their reach and that environment would of course need to exclude the sort of lending practices that prevailed throughout the later part of the 90s and into 2007.

The other practice that needs to cease and desist is the tendency of homeowners to use the equity in their homes as an ATM machine to go out and buy cars and boats and ATVs and other toys every time they realize a little bit of home value appreciation. Yes owning a home is an "investment" but it should be viewed as a "long term investment" you start out in a small home, the value increases, your family grows and you need a slightly larger home, you use money you have saved plus the increased value of you current home to get into that larger home, then as the kids eventually move out and its time to downsize you sell off the larger home and into a more manageable "retirement home" banking the money from the sale of the old homestead to help make your retirement more comfortable and affordable.

Also consider that when we create an overblown housing market and those who are currently in a starter home can't get their home sold in order to make a move into a larger home to accommodate a growing family then that person who is in that larger home also can't get their home sold in order to make their move into a downsized "retirement home".

It appears our Government and economic experts that predicted several months ago , that it was picking up, were wrong again; we are in a depression, not a recession, the only difference from the 1930's is, food stamps, welfare, housing allowance, unemployment insurance, medicaid, medicare ssi income and social security; however the Treasury is bare; the government has borrowed against all social security trust funds, all military retirement trust funds, all civil service retirement trust funds all medicare trust funds and all other funds that were set asides; we are on the edge of a giant cliff, the fall is not going to be pretty.

Houses have been overpriced for a while now. A 3 bedroom 2 bath with a garage should never be more than $100K. That is a basic home and it should never be more than twice the average income. In fact most houses should be less than $70k. The problem comes from the myth that a house is an investment. Sorry it is not. There is NO reason a house should increase in value. What increases is equidy and that come from owing less than the house is worth. House values can and do go up and back down again. That is what we are seeing and all those that bought into the house as an investment myth are not mad their investment just went broke.

The prices of homes already built should always go down. The cost of new homes will go up because of inflation and until we can stop the fed from printing money hand and foot inflation will be out of control. Just imagine how low these drops would be if our fed had not devalued our dollar.

A house is not an investment. $150k purchase plus $50k in interest plus 30 years of upkeep and repairs totaling $200k+ and just guestimating you end up with a house that cost you $400k. Does anyone here want a $150k house for over $400k? I did not think so. And I bet it would really be much more if I did the research on it.

the only difference from the 1930's is, food stamps, welfare, housing allowance, unemployment insurance, medicaid, medicare ssi income and social security;

Don't worry, republicans have a plan to ax all of that and leave us all out in the street again like last time. They want all 30 million of you unemployed deadbeats to know it is your fault that you can't find a job or feed your family, not deregulation and the biggest wealth grab in our history by the top 1% who just can't find a few days in their vacation to create some new jobs.

Yeah, I don't know why falling home prices are thought of as a bad thing. A house is essentially just another consumer good. Nobody complains when cars and TVs get cheaper. Take advantage of the lower prices and buy a vacation home or something. If your primary home isn't worth what it once was, so what? The only person affected by that will be your kids when they sell it after putting you in your grave. I mean sure a higher valuation will allow you to borrow more against it but it doesn't help you buy another house (since they've all gone up in price). Its just inflation.

Houses should be related to the income of those in the the market they are in, the desirability of the location, and the build quality and size the house, nothing else. Lot of the increase in value was based on speculation, not proper valuation.

Everybody became a speculator, house flippers and used houses as ATMs, cashing in on their supposedly increasing value.

Like student loans they are also heavily based on the amount and terms of loans available. Homes used to cost 2x annual income in the 1960s, if nobody could qualify for a loan for more than that you'd see home prices become pretty damn affordable pretty quickly.

This is great news for us home buyers. My husband and I have been trying to purchase for years and can finally afford to do it. Not only are the prices lower than ever, but interest rates are at an all time historical low. We are both hard working,college educated individuals and are in our 40's. Two of our children are grown up. It's sad that we were not able to purchase our own house until now. If you are curious to see the home values in or around your neighborhood and how low they are you can look at them on this website: bit.ly/rM1xoV

Actually it depends entirely on what market you are in, here in Colorado, in the Denver Metro Front Range area, the inventories are at the lowest levels we've about 2 decades.

In some respects we are a bit lucky here, in the 90s the market was totally overblown and well before the recession of 2007 home values flattened out instead of continuing to skyrocket as they did in many other parts of the country. Certainly there has been some negative impact here as a result of the recession but because 'some' level of market correction had already begun to take place in the early 2000s the impact wasn't quite as negative here as in some other areas of the country.

what a moron...really!?!? Wisconsin, Washington, Oregon, California, and Nevada are red states...ever heard of Harry Reid?!?!?! just because you talk out your ass doesn't mean intelligent people can understand you.

Maybe he thought the Red states on the Map meant they were Republican! Take another look Rick...it means they had the biggest drop in home prices. Yes Liberal welfare states like California, Nevada, Washington and Illinois......Duh

NV a liberal welfare state? WTF are you talking about? Have you ever been to NV? This is one of the biggest backwater redneck pits in the USA. Education sucks because no one wants to pay taxes. Mining and gaming run this state and contribute as little as possible while ensuring their taxes remain incredibly low by influencing our elected officials. Our moron officials rubber stamped rampant, shoddy construction by mostly out of state companies. The huge Las Vegas bust was the result of greed by the big banks and financials who financed the developments and gave loans to anyone with a pulse. Now taxpayers are on the hook for the fallout.

All you need to know about Nevada is they gifted the Nation with Harry Reid. If you are so Red please, please take the old bastard back. You can also blame your Senator and the POTUS for the mess on the strip. BTW Nevada has no Personal Income Tax. How in the hell can they be on the hook?

California, Washington and Illinois are all donor state - they pays more in Federal taxes than Federal money they receive. Source: http://www.scribd.com/doc/8229012/Tax-Donor-or-Contrib-States

In fact, most of the so-called "welfare states" are indeed welfare states, but not in the derogatory manner in which welfare is applied to them - they give welfare to the Red States.

I don't know much about Washington off the top of my head but the Irony is that California and Illinois are completely broke and on the verge of bankruptcy. Yet they keep sending the same dumbass Democratic Congress persons to Washington that allows that to happen. Its hard to be Smug when you are obviously just stupid!

Exactly. Distressing news? No. Expected news.

It's only distressing for those dumb enough to buy into the hype and pay hundreds of thousands more than what their house was worth.

Housing prices should be expected to fall more.

Our government is lying being caught in the lie and having to then tell the truth always revising the numbers to a grim reality.

For the majority of time that people have been getting mortgages, banks would not lend you that much money if you had just started a new job and they didn't lend that money for a VERY good reason. You weren't established in that job and thus were the most likely to lose that job. Once you have been in a job for a year or more those chances greatly drop. It's simple economics.

Yes it will take years for many first time buyers to be able to get a home (always used to be that way) and yes, prices will likely have gone up by then, but then again, so will what that first time buyer is making as well.

Banks do NOT set the prices on houses. I wish people would get that through their heads!

I have never heard that most house have to close within 30 days, where did you get that from? The banks do not set the prices unless they own the house, the owner sets the price. I never heard of a bank setting the price too low, except to entice buyers into a bidding war in a foreclosure. When a house is sold the agent is supposed to take the lockbox the has the key, so nobody should be able to get in, the owner should also change the locks at that point if they are smart. You seem to be very confused or you have a really lame agent telling you BS.

We bought a house in April, on a short sale. It was an FHA loan and we paid 3.5% down. The main problem was finding a house that fit what we were looking for, our agent wanted to sell us anything, not what we were looking for. It took 7 weeks to close which was fast for a short sale.

If you walked away or didn't pay your mortgage you have demonstrated you are a poor risk. If I lent you money and you didn't pay it back I wouldn't be quick to lend you more either. It may not have been your fault if you lost your job but that doesn't change the FACT that you were unable or unwilling to meet the financial obligations you agreed to make. One of the reasons we are where we are today is because it was TOO easy to get loans during the growing bubble. Now things have adjusted back to being more difficult...i.e. like they were for MANY years before the bubble and easy money.

It's the old remove a bandaid conundrum. Rip it off fast it hurts a lot for a short period of time or peel it off slowly and it feels like it hurts less but goes on longer.

Dude... use a little common sense. The bank DOESN'T care how much you borrow.. just that you pay it back. They'll make the same interest whether they write one mortgage for $200,000 or two for $100,000 each. Actually with the fees and such they'll make more with two lower dollar amount loans than one larger loan.

@xdm9mm

Actually the banks want some people to fail so they can make max profit and repossess the property.

Even worse these same banks took no interest loans from the Fed and failed to give liquidity out instead they took the money bought up smaller banks and refused to take any risk.

Banks are greedy, people are greedy and now we are ALL paying for greed and corruption at all levels of government, wall street and the banksters.

You make it sound like California was some sort of good deal real estate market before the crash. It wasn't. The prices of homes there were well above the national average which is why over the years so many people moved to Oregon and Nevada because they could buy twice or three times the home for what they were paying in CA.

JJ> They weren't a good deal particularly. It was simply what the market was. One either bought a home at the time or one did not. In hindsight now I would have not bought in 2004 or at any time between now and then.

True - you could buy a lot more house in Oregon or Washington back then - and probably still can. Unfortunately when your career is rooted in a particular part of CA you don't buy in Oregon. The commute is just too tiring.

I remember seeing what I called large garages being sold as homes in California for $750,000. And they wonder why people think California is home of the fruits and whackos.

The article does have a map showing which markets are still falling and the ones that are stable.

Prices are up in your area? Watch out for when they crash in the future. The market can only go so high before correcting.

@ Rob

It's no longer an investment.

And there lies one of the factors to the housing bubble. Second homes, rental properties, etc. should be considered investments. It's unfortunate that you bought when you did. If you've been for 6, then maybe you could refinance. Even look at 20 years with an extra payment or two. Good luck.

Did you lose your job? Why are you $50,000 underwater?

boom!reason... Maybe you don't know this, but the term "underwater" indicates a mortgage for more than the "current" value of the house. He DIDN'T say he was delinquent.

Rob.... Keep making the payments. If you look at the house as a HOME and not an investment you'll be much better off. If you play the jingle key game, you'll 1) trash your credit score, 2) throw everything you've already put down and paid down on the HOME away, and 3) lose yet more while you pay rent and lose the deduct-ability of that payment.

My bad, I don't keep mortgage information at the front of my mind.

Depending on the location, in 20 years the home value may be more than double what you paid for it, such as if you purchased in a historic neighborhood. I knew somebody who turned down a $20,000 Brownstone in New York that is now worth millions -- although that is the exception.

You should not expect a house's value to definitely increase. Live there and be happy. Would you sell your car knowing that it devalues?

The main thing is to discard your "housing bubble" mentality. Think of any other product. Which ones increase in value in 20 years, and which ones decrease in value over 20 years.

If you bought new construction out in the boonies, you can't expect that to increase in value to match bubble prices.

Normally houses, long term, house value barely follow inflation (their value increase slightly faster than inflation). So, its a OK place to put your money if your conservative and think long term. Its not something you should put money into to make a mint. That kind of mentality is a big part of the problem and hopefully people are cured from this.

Losing on paying a mortgage is only losing when rents are close to what you are paying.

Eventually prices will correct unless the current regime continues to spend out out of control, push for higher taxes, print money and borrow to much.

We are now dealing with many of the same issues the failed weimarch republic was dealing with when they had their bank failure and out of control inflation.

Eventually prices will correct unless the current regime continues to spend out out of control, push for higher taxes, print money and borrow to much.

Prices have adjusted. That's why they are considered low. This has nothing to do with Obama since, if you recall, the housing bubble popped in 2006. That's how the free market works, and a very basic tenet of economics -- that markets will correct. Housing prices soared far too high, and the "low" prices we see today is the correction.

We are now dealing with many of the same issues the failed weimarch republic was dealing with when they had their bank failure and out of control inflation.

You know, I listen to Rush Radio as well. But I also have the sense and historical understanding to know that we are nowhere near that.

appreciate all the comments. :) Free financial advice! lol...of course, from WHO is the question. :) I dont really appreciate the political comments though. We all have our OPINIONS on that.

When I say our home is an investment, it's not meaning like it's a second property or something...it is our HOME. But, everyone buys with the thought in their head that either

1) a few years down the road (5...10...15?) you would sell the place, pay off the mortgage, and have enough for a down payment on a new home (this is our 1st home...a town house)

OR

2) maybe if you are a little closer to retirement selling your home when you retire as part of your retirement financial strategy.

I dont see either of those things happening at this point. I'm about 18 years from retirement. From a financial point of view, that's not a heck of a lot of time. And to continue paying on a mortage that is $50,000 under water, I just dont see how that makes sense. My guess is it's going to take at a minimum 10 years just to get that value back.....if not longer.

Walking away, while definitely has it's downsides (personally and on the neighborhood), in this economic environment, you really can't ignore this option. I'm intending to fully explore.

Keep in mind that you decided that, when you closed on the house, that the price was right for you. If you are able to make your payments, what exactly is your concern?

Your home is your home, and you decided that price was good for you.

If you are more than 20% underwater on your mortgage quite paying your payments and stay in your house until they come to move you out. You may be able to stay for several years because the Banks don't want repo's on their books so if they carry it delinquent they don't have to cover the collateral for your home.

In 2008 Banks walked on Billions of Dollars in loans that they had made commitments for. They ruined companies and lives and their answer was "it is just business". It is perfectly fine if you do the same, walk away from a bad investment and tell them it is just business.

I wonder why some need to crow so loudly?

what's distressing?? How about middle classers like me who now have a mortage that's $50,000 under water. All those people who got royally screwed by the banks who destroyed the economy and they got awayt scott free and we, the middle class home owners were left holding the bag.

that's what's freaking distressing.

got it??

All those people who got royally screwed by the banks who destroyed the economy and they got awayt scott free and we, the middle class home owners were left holding the bag.

Question: Did they force you to close on that house? Did they force you to close at the price that you decided was "good" for you?

How then, exactly, have the banks "royally screwed" you in this instance? You went to them and happily bought their product. The banks helped you finance your bad financial decision, and you want them to save you from yourself? Imagine how outraged you would have been if they refused your mortgage on the basis that it would not hold its value. You fell in love with that house, and happily over paid.

Unless you planned to flip the house, the current value of it should have no impact on your enjoyment of your home. And if you did decide to flip the house, that's part of the risk.

You have sour grapes because you willingly and happily overpaid for your home and want somebody to blame for your bad choice.

Who held the gun to your head?

you are a clown.

We did not overpay for our house.....the market was the market. Inflated by govt/bank collusions to push more and more "creative" mortgages onto more and more people. And when they realized they had pushed too many of these mortgages on to too many people who were ultimately not going to be able to afford them, they covered it up and covered their asses by chopping them up into little bitty pieces, threw them in a barrel and sold them as triple A credited to anyone who wanted them....knowing full well, they were anything but triple A.

That's how the banks screwed us....as in, us, the country. In the end, they are the ones who threw us to the brink of economic collapse, cost millions of people, their homes and their jobs, and not a single person ever went to jail....not a single prosecution....not a single crimminal charge.....nothing. As a matter of fact, they got rewarded, they got bailed out and the middle class got left holding the bag.

bury your head up their ass if you like, it's no concern to me. But, don't try and sell crazy here. We're all stocked up.

Inflated by the government and banks? And you call me the clown! Who set the prices on those homes? The seller.

Yes, they were stupid for awarding mortgages to those who couldn't afford it, but so were the people who couldn't afford it for not knowing that they couldn't afford it.

As for the securities, only the people who rated them knew that they weren't A+ material, and everyone else believed the rating.

I was not referring to the country as a whole in my comment, if you could see. You are complaining in your posts about how you, personally, were screwed by your house being underwater. You most certainly overpaid for your house, because you thought that the house was worth that. I knew that all those houses were overpriced, and that there would be a crash, so I saved my money and bought several at rock-bottom prices. You claim to be financially responsible, but you are fooling yourself. No financially responsible person would have bought at the height of the market, and no financially responsible person who consider walking away from something they overpaid for.

You want to live in a fantasy world where you are blameless for your choices, and that you were forced to pay a certain price. Did you get an ARM from your banks?

The fact of the matter is that you have only a passing understanding of our economic situation, but believe that you are well informed. You aren't, so get your head out of your ass.

After all, you are the one who came on here crying "I overpaid for my house, should I shirk my responsibilities?"

boom! - The whole country was screwed by the banks and the Fed.

I was not arguing against that, Keith. Don't forget that government policies for decades also set the stage for this recession.

What I was arguing against was his assertion that he, personally, was screwed by the banks inflating the price of his house. He is under the delusion that 1) he did not overpay for his home, 2) the banks inflated the price of it (even though, paradoxically, he did not overpay), 3) that he is financially responsible.

People love to believe that their house is worth everything and more than what they had paid for it, so it is not unreasonable for him to be blaming others for his decision to way far too much money for his house.

I have seen houses that in 2001 cost $200,000 and in 2006 cost $800,000. Now people who paid that over-inflated price want the next idiot buyer to pay more than they did for the house.

If somebody bought near the top of the market, they will lose money. It is that simple -- they paid more than the house was actually worth.