Home prices are continuing to creep lower and while it may not seem like it to some, especially those trying to sell right now, this is actually a good thing for the Real Estate market.   A recent Newsweek article explained why lower home prices are the only solution to the housing slump. “It’s elementary economics. Pretend that houses are apples. We have 1,000 apples, priced at $1 each. They don’t sell. We can either keep the price at $1 and watch the apples rot or cut the price until people buy. Housing is no different.”

There are not too many homes on the market right now, there are just too many that the current buyers can not afford. Prices went so high for so long that buying a home became considerably more difficult. Added to that are more stringent mortgage requirements creating an even more troublesome situation. The only solution is more affordable home prices. How much prices have to drop to become affordable to buyers varies significantly from area to area, even neighborhood to neighborhood. 

The problem with declining prices other than sellers losing money when they sell is that decreasing prices have scared some buyers. Even as home prices become more affordable buyers continue to be reluctant to make a purchase. Also the increasing rate of foreclosure makes borrowers reluctant to borrow because they are afraid they won’t be able to pay what they borrow back. For the most part many buyers will see opportunity in the number of homes on the market that fit their criteria and the new more affordable prices.

For the complete Newsweek article visit http://www.newsweek.com/id/118914/