National Home Prices Drop for First Time

When you think about places hardest hit by the current housing slowdown, states such as California, Nevada and Florida come to mind.

But now new figures indicate that a contained real estate bubble is spreading, and it's affecting home prices across the country.

Jan Walston thought selling her Houston-area home would be a piece of cake. Her realtor thought it would only take about a week.

"It's been several months now, and, um, we just haven't gotten a good contract and its been an emotional roller coaster dealing with that," Walston said.

She's now asking less than what she paid for it five years ago.

Walston is just the latest victim of a hemorrhaging housing market. Fueled in part by the mortgage woes of the world's big financial houses, for the first time since federal housing agencies began keeping statistics in 1950, the national median price for U.S. homes is expected to drop in the next several years.

Shrinking Assets

Homes are the single greatest asset that most Americans own. They've got a lot of savings locked up in their houses, and they don't want to see the values decline.

Experts forecast that after factoring in inflation, home prices will drop 10 percent nationwide by 2009.

And as home prices slip, consumer confidence is expected to follow.

"A lot of homeowners are gonna pull back on their spending, and as you know the person who really keeps this economy chugging along is the consumer," said Stephen Moore of the Wall Street Journal.

Walston has thought about just taking her house off the market. But she's counting on selling this home to purchase a new one.

"We've signed another contract, we got the loan approved, we've got the interest rate locked. The only thing we're waiting on is for this house to sell," she said.

Bargain Hunting

The news isn't all bad though. Lower home prices mean that it's a buyer's market out there. Of course it's tougher these days to get approved for a mortgage loan, so having good credit is still key.

And so what about those who are looking to sell? What advice do experts have for them?

For homeowners, especially in areas outside of notorious trouble zones like California and Florida, there is no need to panic -- the situation will will most likely be resolved within the next 18 months. So if you can, wait to put your home on the market. And for those in the market to buy: the next 18 months could offer great deals.