From an article in the International Herald Tribune

“Foreclosures helped fuel the sharpest decline in California housing prices in at least 20 years last month, and that’s attracting an influx of first-time buyers who had been priced out of the market or were waiting for prices to bottom out.”

That provides a little positive spin to what has mostly been negative reporting on foreclosures, but one key sentence I found interesting was: “Right now our mortgage would be relatively close to what we pay for in rent”

I’ve long believed there is a fundamental relationship between area incomes and area housing prices, unless there is a strong evident outside influence. Vacation areas can be an exception, as can highly urbanized areas, but there’s a strong correlation between how much area residents make and how much the housing costs. With the “speculation factor” no longer present, people can make rational decisions about the cost of purchasing a home versus what their minimum shelter requirements cost. When there’s a smaller gap between rents and monthly ownership costs, people WILL buy homes and that, in a nutshell, is the solution to the foreclosure “crisis”. Prices need to come down to levels appropriate for area income.