Home prices down

Lender Processing Services' home price index found a 3.8 percent year-over-year decline in U.S. home prices in August, which is nearly 30 percent of the market peak seen prior to the mortgage crisis.

Kyle Lundstedt, manager director for LPS Applied Analytics, said September data indicates a further decline of 1.1 percent to come. The decline seen in August marks a 28.3 percent decline from the market peak in June 2006, with the total value of U.S. housing inventory at $7.65 trillion, down from $10.6 trillion at the peak.

With home equity dropping, many homeowners are struggling to refinance or make their monthly mortgage payments. According to CNN Money, downgrading to a smaller house might be the best option for struggling homeowners, as the transition could reduce mortgage bills and maintenance expenses.

In order to move into a small home, homeowners must be patient and await a stabilization in their local markets before selling. If they try to rush and sell to the first buyer, they will likely take a significant loss in the low price. Rather, the source recommends homeowners wait a year or so, when experts predict a stabilization in the market is likely, and correctly price the home according to local levels.

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