The fallout of a dramatic drop in home prices

Staying with the current theme-Per Bloomberg-U.S. Home Seizures Reach Record for Third Time in Five Months. We’re on track for a record year for homes in foreclosure and repossessions,” Rick Sharga, RealtyTrac’s senior vice president, said in a telephone interview. “There is no improvement in the underlying economic conditions.” Foreclosures are contributing to a growing housing supply that may add as many as 12 million homes to the U.S. market. Demand is crumbling amid high unemployment and following the expiration of a federal homebuyer tax credit in April. Sales of new and existing homes fell in July to the lowest level on record. Home prices have fallen 28 percent since 2006, according to the S&P/Case-Shiller index of values in 20 U.S. cities. The data while bleak is not as devastating as what might happen when the home value market starts to cut to the bone of good credit individuals and those who understand the value of their respective money. As an example. A good credit client with solid assets, will continue to live in his respective home while its value drops- up until 30- 40%? What of 6o% or more? Does it make sense? What happens when we get to that clearing price and all of a sudden we create a problem for the “good homeowner”.