Who would have imagined very recent home buyers are still being pulled "under water" by the continuing home price drop? See this Reuters article for details of recent buyers owing more than their homes are worth.
It may be that dreaded deflation is part of what is hurting the housing market in the U.S. If I were in the market for a home, and read about further falling home prices, I'd consider waiting for those even lower prices, wouldn't you?
Deflation (falling prices) is among the things economists worry about most. When prices fall people hold off making purchases believing the price will be lower in a few days or months. Their refusal to buy drives prices even lower - a so-called "vicious circle."
