Whither goest housing?

We're not going "biblical" on you, but if you take a look at the collapse of housing prices since 2006 you must admit the collapse has been of biblical proportions.

A few examples:

• Orlando down 27%
• Miami down 48%
• Phoenix down 54%
• Las Vegas down 54.6%

We could go on...but you get the message.

The housing industry was encouraged over the past few months when the S&P/Case-Schiller Home Price index said that most housing markets had stabilized with home prices gaining 3.6% over the months of May, June and July.

And all the so-called "experts" hit the airwaves to talk about a housing recovery.

But here's the reality: the Cash for Clunkers program inflated new car sales for the duration of its existence. The first time homebuyer tax credit did the same for housing sales.

That program is currently expected to cease operating at the end of November. But during its short life it will be used by 1.8 million homebuyers, 355,000 of whom would not or could not have bought a house without it.

We question, as we did with Cash for Clunkers, how many future sales of homes were telescoped into the months the tax credit was available and just what this might do to sales going forward.

We believe there will be fewer buyers in the market which is why Fiserv, a financial information and analysis firm is predicting another 11.3% drop in the value of homes by June of next year.

We can hear homeowners' collective gasp with this latest pronouncement.

So, ever ready to leap into the financial void, Congress is talking about extending the first time homeowner tax credit to at least keep the cheaper end of the market going.

This is despite the fact that the credit is now under scrutiny for fraudulent claims. The IRS is examining 107,000 questionable claims and has already unearthed 167 criminal schemes!

Yes, when times get tough the scammers and cheaters get going. But unless you scour the business newspapers or some internet websites you'll never hear about this latest rip-off of taxpayers in the mainstream media.

Nonetheless, with or without an extension of this tax credit, we don't expect to hit the bottom in price declines until 2011 at the earliest.

So for buyers, there's plenty of time to jump into the housing pool. Cool your jets and do your pricing homework.

For sellers, who really need to move, check out our tips on how to sell your home in a tough market. And be ready to bargain.

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