What’s so bad about falling home prices?

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

This is a question I’ve asked before, but blogger and columnist Daniel Weintraub at the Sacramento Bee asks it more eloquently than I did: What is so disastrous about falling home prices?

Weintraub: ‘It is great news when the price of energy, food, transportation, health care and consumer electronics drops. But for some reason it is bad news when the price of shelter drops.’

More: ‘So now that housing prices have stopped soaring and in some places are dropping, shouldn’t that be good news? Shouldn’t we be seeing stories filled with anecdotes about formerly priced-out middle-income families finally getting their chance at the American Dream?

‘I understand why foreclosures are bad news, and why the impact of losing a house when you can no longer afford to make the payments is a compelling story. But for every house sold because the buyer couldn’t make the payments, there is a buyer on the other end of that transaction who got a good deal. And for every foreclosure, there are probably 10 buyers of nearby homes who benefitted from the general easing of house-price pressure.’

It’s clear falling home prices are causing some economic damage. Still, these are good points. I know a lot of you will agree, but I’d also like to hear from those of you who disagree. Thoughts? Comments? Email story tips to [email protected].

Hat tip: Sacramento Land(ing) blog