Moderately Confused (12/15/09)

Sometimes I look at falling home prices and think they represent a return to sanity rather than a burden on the economy. Other parties look at the situation quite differently. The federal government offers an $8,000 tax credit to first time home buyers, the Federal Housing Authority insures mortgages with down payments as low as 3.5 percent, and banks slash their rates on 30-year fixed mortgages to historic lows (under 5 percent in some cases). All of these seem like desperate attempts to keep home prices high at a time when they should be falling. I say this even though my fiance and I have spent the past month excitedly searching for a home of our own. We’re happy that a 3.5 percent down payment is available to us, but we’d be even happier if homes were priced at a level that gave us some hope, any hope, of saving up the 20 percent down payment that has been the benchmark of sustainable home ownership for decades.

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