Surviving the double dip in housing prices

by Gerri Willis

Take a close look at those housing numbers out today - and you'll begin to understand how deep the housing crisis really is. U.S. single-family home prices dropped in March to fall below the low hit in April 2009 - that was right smack dab in the middle of the financial crisis. In other words - as I've been saying - we really are facing a double dip in housing prices. The S&P/Case Shiller data released today tells the story: Its composite index of 20 cities declined two-tenths of a percent from February. The national index, the 20-city composite and 12 cities all hit new LOWS through March 2011. The national index fell 4.2 percent over the first quarter alone, and is down 5.1 percent compared to its year-ago level. For homeowners - a quarter of whom are already underwater - owing more than their home is worth - the news is not encouraging. And , it's clear that you won't be able to rely on any government programs to bail you out. The first-time homebuyer's tax credit is simply extending the pain of the downturn rather than fixing it; while President Obama's HAMP program has had precious little impact. The good news is that owners don't have to realize this loss unless they sell or need to refinance their mortgage. If you're in that position, you may well be able to hang tight until the market improves. In other words, you're going to have to survive on your own. My advice if you are waiting out this downturn: Don't overinvest in the house you are living in. If you're tempted to drop a lot of cash building an addition or a state of the art kitchen, don't even consider it unless the improvements are matched by your neighbors' homes. The last thing you want to own is the fanciest home in your neighborhood. You'll have a hard time reaping the benefits of that investment. If you can drop your costs by refinancing - 30-year fixed rates are at 4.5 percent for people with good credit - do it.