Record Drop in Home Prices Feeds Pessimism on Economy

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will continue until working class men and women ($10-$20 per hr) can afford payments which equal 35-40% of monthly income....we are looking at a long way to drop folks...two people making say $15.00 per hour dont qualify for a $300k mortgage, no matter what way you look at it...they qualify for about $150k....so 2 and 3 bedroom starter type homes accross the nation, should be 150k or lower...it doesnt matter if you live in des moines, iowa,,,or califonia.....everything priced above 300K is EXCESS./..///demolish it and build two homes for 150k each.

dana of CA 1:22PM April 01, 2009

The banks and mortgage companies who bundled their home loans into mortgage securities then proceeded to foreclose on homes when the adjustable rates suddenly doubled homeowners' monthly payments caused their own downfall as investors lost confidence in the stock market when the resultant housing bubble burst. Freddie MAC, Fanny MAE and AIG got stuck with the sub-prime loan guarantees and banks gave them much of their toxic assets -but still had bundles on their books. Depositors lost confidence in the banks and the initial run on some large banks like WAMU wiped out their reserves and operating capital. What these banks should have done was to renegotiate with borrowers because getting the initial loan payment rates was better than getting nothing. Of course they shouldn't have been making sub-prime loans to begin with - but the Federal Reserve had flooded lenders with cheap money, so who could resist making as many loans as possible for commissions and points? As the price of houses inflated, so did loan agents' commissions and lender points. The home value plunge actually puts things more back in line with what would have been had not the artificial housing bubble been created in the first place. The people who got wiped out were those who would otherwise not have qualified for home loans based on prudent lending policies and the greedy bankers who went for points and commissions rather than to protect their institutions from bankruptcy because they depended on Fannie, Freddy and AIG to bail them out. And they were right - when that wasn't enough, the federal government stepped in with future tax dollars to bail them out - and they still kept their commissions and points earned during the heydays. When consumers lost confidence, the whole house of cards fell, and along with Humpty Dumpty - all the kings men and all the kings horses are having a difficult time gluing him back together again. Unfortunately, it's the economy that got shut down with the lost of confidence.

Tony Lee of CA 7:54PM March 31, 2009

I'm not denying that falling housing prices is bad for many. But for some of us, it's a welcome relief.
My grandmother's next door neighbors house, in 2004, sold for over six hundred thousand dollars, and while it was sort of a nice place, it wasn't that special. Average, everyday Joes making a modest income like myself can't afford that.
Even buying a cheap trailor isn't so inexpensive. During the turn of the millenium, I could've purchased a decent trailor on a small piece of property in my home state of Maine for twenty five to thirty thousand dollars.
Now in 2009, myself buying mobile home like that, forget it! I can't afford the now higher prices trailors go for.
So I'm hoping that the prices of houses and trailors become more and more reasonable, because I deserve the chance to be a home-owner.

Mike Brown of ME 7:52PM March 31, 2009

The invisible hand of the mortgage backed securities.

Luther of IL 2:55PM March 31, 2009

This is like "1984".
Where do they get their statistics?
Well, I live in No. Queens (NYC). THere's this tiny house down the street, cute but only 1,100 SF total area. It was on the market since January and just sold for $545,000.
It was overpriced by a factor of 3 two months ago, $625,000, and it was still overpriced by a factor of 2.5 at $545,000.What on earth is everyone talking about?
In Europe they'd laugh at this dog house-sized "American Dream" for over half-million dollars.

Sam of NY 1:58PM March 31, 2009

Keep this comment in mind should your home foreclose or drop in value:
Just wait,if the three stooges (Senators Bayh,Kyl & Specter) get their way,values will keep going down as foreclosures will keep rising.These guys are blocking efforts (H.R.1106 / S.61) for homeowners to have access to the bankruptcy courts.They have taken so much money from wall street that they have forgotten about main street.Next election Vote Out the Incumbents-all of them

joe johnson of AZ 1:56PM March 31, 2009

Why did it take so long for this report to come out? I was thinking this would be for the month of March or at the LATEST February. I think in tough times like these, it's important to keep the current news filled with current data.

E0922 of WA 12:48PM March 31, 2009

one..two..three JUMP!!!

mcbee of GA 12:36PM March 31, 2009

Yes, our economy has spiraled downward. We had "issues" before but since it was announced that Obama won, consumer confidence and business confidence has all but crumbled. In our consumer economy, how secure people feel determines our spending.
Obama/Pelosi have and continue to scare the death out of everyone in the US and abroad. A "leader" would recognize this instead of forging ahead with his"Brave New World" agenda that WE cannot afford (or want).

Chris Petty of GA 12:12PM March 31, 2009