Always look on the bright side of life... Mr. Kaus notes the accelerating decline in home values, and sees a silver lining:

Are you impressed with a "drop in home values of 6.6% over a year? It doesn't seem like such a big correction, given the dramatic run-up in prices over the last decade or so. ... And don't declining prices make housing more... what's the word? ... affordable? ... This evening NBC Nightly News billboarded a "housing CRISIS." (Link available here.) I thought a "housing crisis" was when people couldn't find housing, not when it got cheaper. (NBC's expert: "It's very, very difficult to find any silver lining." No it's not.)

I like that way of thinking, because, on a personal level, I certainly see a "silver lining" coming out of all this, in the way of more clients visiting my office. I suppose morticians get the same feeling every time there's a natural disaster; with bankruptcy lawyers, it's the thought of a member of the Bush family in the White House that gives us some serious wood.

For prospective homeowners looking for bargains, however, I don't think the declines we've seen to date are steep enough either to entice them into making an investment or to lure them into establishing a homestead for their families. And since so much of the economy's growth in the past decade has been the result of people being able to invest their home's equity, the current squeeze isn't a zero-sum game, where a homeowner's loss is a potential home buyer's gain; a 6.1% deflation in home values* means that there is 6.1% less money to pay off other debts, which means more defaults in other areas, which leads to more creditors losing their investments as well. It also means 6.1% less money will now be invested in the stock market, in construction, in tuition, in tourism, and in other branches of the economy that relied on the money people obtained after refinancing their homes.

But I bet it will mean at least a 6.1% increase in bankruptcy filings....

*Based on the twenty largest metropolitan areas. When focused on the ten largest metro areas, it comes to a 6.7% decline. Yikes.