Declining home prices not the end of the world

The AJC had an AP article headlined with

Foreclosures sank home prices in most cities

Home prices fell in nearly nine out of every 10 U.S. cities in the fourth quarter of last year as low-cost foreclosures flooded the market and the housing market’s decline spread nationwide.

But is this necessarily a bad thing? Sure, it hurts when you have to sell you house in such a market--your gains on the house now are not what they could have been 2 years ago, or you might even be loosing money. And it hurts if you cannot make your ARM payment and cannot refinance because you're underwater.

Home prices in Ft. Meyers Florida are down 50%. Down 12% nationally. But lower house prices are *good* for lots of people--people who are trying to buy homes! Many people in the worst hit areas can now afford housing that they were priced out of a short time ago because of artificially inflated prices (housing bubble).

The states in which sales rose —- Nevada, California, Arizona, Florida, Minnesota and Virginia —- are places where buyers have been able to snap up foreclosed homes at a bargain. Sales more than doubled in Nevada, rose 85 percent in California, and nearly 43 percent in Arizona.

“We see a pattern of strong sales gains, particularly in lower-price homes, in areas with price declines resulting from foreclosures,” Lawrence Yun, the trade group’s chief economist, said in a prepared statement.

In California and Florida, sales of distressed properties accounted for about two-thirds of all sales, compared with about 45 percent nationally.