Home Prices in “Double Dip”

From CNN: "Home prices in February sank 3.3% to just above the post-crisis lows reached in April 2009. It was the seventh straight month of declines. Home values are down 32% from their peak set in May of 2006, according to the S&P/Case-Shiller index of home prices in 20 cities." http://money.cnn.com/2011/04/26/real_estate/february_case_shiller/index.htm?hpt=T2.


This unfortunate trend should come as no surprise to anyone who has been following the housing market over the last few years. Government efforts to artificially prop up the market are failing, and homeowners continue to pay the price. This is especially troubling for people who bought homes based on the homebuyer's tax credit, or who took out home equity lines based on artificially inflated home values. A larger and larger number of homeowners are finding that they have absolutely no equity left in their homes, or that they are actually tens of thousands of dollars "underwater" on their mortgages, which gives them less flexibility when their families run into financial trouble.



As usual, middle and lower class Americans are paying for Washington's mistakes. The politicians and their Fannie Mae/mortgage industry cronies have created a disastrous situation: they have pumped untold billions worth of taxpayer money into trying to keep prices up, and they have lured more and more people into bad mortgages by claiming that everything is OK. The solution is simple, but unavoidable: the government can't continue to pile on its past mistakes by throwing more money at the problem. The market is going to have to fix itself, and prices have to come back to their natural levels. The tragedy is that average Americans are going to have to pay the price.


Consumers do have several options to try to get themselves out of trouble, such as mortgage modifications and bankruptcy. These are complicated areas, and consumers should find an attorney who is qualified to advise them about the specifics of their situation. Consumers who got particularly bad deals should also consult with an attorney to determine whether they may be able to bring suit for predatory mortgage lending.