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Upside to Falling Prices: Housing Affordabilty Index Reaches 4-Year High

I could agree that homes are getting more affordable. I live in Florida and just purchase a home (south florida, the worst area now). Families can afford homes in the area. I thought the reports showed incomes rising even while more jobs were being cut.

Point being is that the problem with a lot of purchasers is financing. Banks won't lend very easily, credit is unusually tight right now. Once these institutions can get the bad debt off there books (and the fed is in a way helping by making a price when it loans against the securities) they can start lending more loosely again. Not like in 05' but maybe like they did before then bad credit got no loans but decent credit did.

The underlying fact is the home I bought I paid about 10% then what it sold for in 2003 (5 years earlier). 2004 was when the run up got going and peak was in 2005. On just my example it seems to me that prices are falling to where they should be. And while a 10% decline could be in order due to the fact the market tends to overexert itself when moving a direction, to think price levels will fall below prices that were there before this whole thing started is going against the grain. And it was going against the norm that got us into this mess.