By Andrew Jakabovics
The Office of Federal Housing Enterprise Oversight’s house price index fell the furthest in its 17-year history in the first quarter of this year. After adjusting for inflation—and keeping in mind that food and energy costs have risen substantially over the past year—307 out of 381 metropolitan areas saw house values decline. There are 61 million American homeowners in metropolitan areas, and 55 million of them live in declining markets. All owners in declining markets, not just those with risky loans, stand to see their home values shrink, and with the decline the future uses of that equity: retirement savings, college funds, and rainy-day funds. Recent bipartisan Senate action to move forward legislation that will help safely refinance families at risk of losing their homes, coupled with neighborhood stabilization funds, which separately passed the House and Senate, offer the best opportunity to stabilize local housing markets by limiting further downward pressure on prices generated by large numbers of foreclosures.
Andrew Jakabovics is the Associate Director for the Economic Mobility Program at the Center for American Progress
Andrew is available for interviews; if interested, please contact John Neurohr at email@example.com.