Why a 14.5% drop in home prices isn't so bad

The headline in today's News Tribune is PIERCE COUNTY HOME PRICES TUMBLE 14.5%. Very true. They have fallen significantly over the last year. Now my question is... how quickly and how high did they first climb? In January 2004 the median home price in Pierce County was $188,000. Prices peaked in July 2007 at $294,000. That is an increase of 36.1% in 3 1/2 years. Whoa! That's insane! In 2004 prices increased 13% from January to December. In 2005 it was another 14% increase, followed by a 6.5% increase in 2006. Our market spun way out of control (for many, many reasons) and what we are experiencing now is a necessary market correction. Is that a bad thing?

Unfortunately, if you bought in 2005-2007 your home is probably not worth what you paid for it. If that's the case, I feel your pain. I bought in Sept 06. I could cry in my beer (or, in my case, white wine), but the thing is, unless you absolutely have to sell right now, just wait it out and the value will go up again. It won't go up as quickly because that perfect storm of market conditions/lending/appraising, etc doesn't exist anymore. I am looking forward to the day, which is coming, when our real estate market is stable and boring again.

FYI- The stats and numbers were sourced through the NWMLS and Trendgraphix.