Well, consumer confidence is down -- in large part because of a decrease in housing prices.

Much of the damage has stemmed from a slump in the housing market, where prices are nearly 15 percent off their high in July 2006.

In the 12 months ended in February, the Case-Shiller home price index, which measures the value of single-family homes in 10 major metropolitan regions, fell 13.6 percent, the biggest decline since records began in 1987. A broader 20-city index dropped 12.7 percent.

Of course, there is a reason that we have seen housing prices drop so precipitously -- the last several years have been a part of what analysts were calling a housing bubble. You know, as in the prices of residential real estate was significantly inflated beyond its actual value. And I certainly recall experts saying that in some metropolitan areas we were seeing prices exceed the real value of the property, and the ability of many consumers to afford to make real estate purchases. Not only that, but we were assured that we were headed for a fall wehn the bubble burst.

Well, folks, the bubble has burst. We have experienced what on the stock market is euphemistically called "a correction".

In other words, housing prices are adjusting to a more realistic level, below the highly speculative levels that they reached in the recent past.

Am I saying that the current situation in the housing market is a good one? Not necessarily. But it is interesting to note that the drop in home prices will put a house within the reach of folks who one year ago could not afford to buy one a year ago. These individuals, who acted responsibly and lived within their means, will now be able to make the purchase that they deferred as out of their price range. Shouldn't we be celebrating these responsible purchasers rather than rewarding the irresponsible ones who exceeded their means by giving them a government mandated (and maybe financed) bail-out?

Posted by: Greg at 10:16 PM | No Comments | Add Comment
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