Hint: I'm going to bold the part that's wrong, and not post the rest of the article.
NEW YORK (CNNMoney.com) -- The home price plunge stayed on a record pace this summer, according to a widely watched gauge of national real-estate markets released Tuesday.
The S&P Case-Shiller Home Price national index recorded a 16.6% decline in the third quarter compared with the same period a year ago. That eclipsed the previous record of 15.1% set during the second quarter.
Prices in Case-Shiller's separate index of 10 major cities fell a record 18.6%, while its 20-city index dropped a record 17.4%
With foreclosures soaring at record rates, the economic picture dimming and job losses ramping up, all the elements were in place to push prices lower.
"The turmoil in the financial markets is placing further downward pressure on a housing market already weakened by its own fundamentals," said David Blitzer, Standard & Poor's spokesman for the indexes, in a press release. "All three aggregate indices, and 13 of the 20 metro areas, are reporting new record rates of decline...Prices are back to where they were in early 2004.
Answer: The problem here is that when prices fell by 18%, they fell to 2004 levels. That reflects an insane increase in housing costs over the past 4 years that far outpaces the rate of inflation.
Well boo freakin hoo homeowners. Your house, which you bought for 200,000, and thought you could sell 10 years later for 300,000 is now only worth 260,000. You still made $60,000! Meanwhile, people like me who want to buy their first home have no way of breaking into home ownership, since someone, somewhere, decided that home price inflation should far outpace the rate of actual inflation. How did you think that was going to work out for ya?
I'll tell you how that works out- no one can afford to buy your houses anymore, so you either drop the price or stay on the market forever. So you end up dropping the price. And somehow that's a Big Problem (tm).
Houses aren't something that you invest in to make more money...you're supposed to invest in them so that instead of throwing your money into a big black hole we lesser beings call "rent" you can get the money back in a few years if you want to sell your house. But that doesn't mean you should get your money back at an 18% interest rate! That's just unreasonable! And yet because it's not working out like that, people are freaking out.
(note: the foreclosure problem, though related, is a whole other kettle of worms, and I don't think people freaking out because of that are ridiculous).