Housing Prices in Free-Fall

Well, duh. When you get to the point in some markets where most people can not afford a little 3-2 tract house, it should be obvious that real estate prices are too high and due for a correction. From the Wall Street Journal:

WASHINGTON--Sales of existing homes fell in October as the faltering economy kept buyers on the sidelines even as prices dropped by the most since records began.
Home resales declined by 3.1% to a 4.98 million annual rate from a 5.14 million annual pace during September, the National Association of Realtors said Monday.

"Many potential home buyers appear to have withdrawn from the market due to the stock market collapse and deteriorating economic conditions," NAR economist Lawrence Yun said.
Some sales of existing homes were linked to foreclosures.
"Part of the market-clearing process is that homes in foreclosure must be sold, so the fact that this is occurring is good," MFR Inc.'s Joshua Shapiro wrote in an analysis of the NAR data. "Still, it certainly depresses prices, and there are plenty more foreclosed (or soon to be foreclosed) homes in the pipeline."

The median home price plunged 11.3% to $183,300 in October from $206,700 a year earlier. That was the largest tumble since NAR records began in 1968.

Back during the Clinton recession (2000 - 2001) I recall wondering out loud in my classes why real estate prices were increasing during a downturn. Now we know why: excessively lax lending standards promoted by Fannie Mae and Freddie Mac prompted many people to buy more house than they could afford. During previous recessions, real estate prices fell, sometimes considerably.

So will real estate prices go up or down during the 0bama recession (2008 - ?). My guess is that even His Oneness won't be able to bring them back up any time soon.