Home Price Drop Sharpest in 17-Year History of Index

Wow. Yes, Wow. That’s all I can say about everything I’m seeing recently. I just read that gas could get up to between $12 and $15 a gallon–a gallon! folks, and now the government index, one of the most comprehensive ones focused on the U.S. market, posted a quarterly decline in home prices that’s the steepest in the index’s history.

The Office of Federal Housing Enterprise Oversight said prices dropped 3.1% in Q1, as compared to last year’s, the second ever drop since the index began keeping track. What’s shocking is that the index doesn’t cover the more expensive houses, nor does it cover as many ‘risky’ home loans as do other indexes.

What does this mean? It means that everything in the housing market is being affected, no matter how distant from the subprime loan disasters out there.

But no one in the government is shocked, and neither should we be. The housing market is a disaster, and it’s only going to get worse.

But it makes sense–at least if you look back to the euphoria everyone was in during the boom of buying at historically low interest rates and skyrocketing home appreciations around the country. Seems like we’re getting back to normal–but it’s killing us.

Buyers are waiting, lenders are raising standards, prices are dropping, and foreclosures are mounting. Good stuff. Not. Well, not for all, anyway.