Good news! Seattle housing prices drop!

One of today's top stories is the decline of housing prices in the Seattle area, where the average price has dropped 1.3 percent, comparing January 2008 with the previous January. It's the first such year-over-year drop since 1991. Not to worry, says The Seattle Times' story, "others across the nation fared much worse." Why "worse"? Shouldn't the term be "better"? Haven't we been deploring high housing prices for years, saying how they are driving off residents and preventing our children from ever returning to Seattle? Why don't we think of dropping prices as a blessed public good? Hypocrisy, that's why. The lamentations about affordability are mostly just pious hand wringing, usually by people who are secretly pleased at how much their home values have been going up. Our local papers follow right along, boasting about how much better we do in keeping prices high than other cities. Not only will it be good for the economy to deflate the housing bubble. It could be just what the doctor ordered for the affordability problem in Seattle, assuming we can get prices dropping faster. And we should be taking steps to see that there is a public benefit from foreclosures and dropping prices, not just an opportunity for bottom feeders. A good example of capitalizing on sinking prices is in a proposal from Massachusetts Democratic Rep. Barney Frank, who is pushing for $10 billion in federal loans and grants to help local government and nonprofit groups buy and renovate vacant foreclosed houses, stipulating that they must be sold or rented to people with low and moderate incomes. Such homes, left vacant, can attract crime and harm a neighborhood, so moving fast makes sense. Often the homes require little in the way of improvements, yet they can be purchased at deep discounts as banks are eager to get them off their rolls. There are significant numbers of them, as high as 40 percent of home sales in cities such as Las Vegas and San Diego. Former Mayor Charles Royer, who is heading up a task force to address affordability issues for workforce housing, says the idea might work here. Key would be finding an agency or a nonprofit with enough scale to handle the challenge. "Maybe the Seattle Housing Authority?" suggests Royer. I have another nomination: Washington Mutual, which owes the region and the nation, big time, for perpetuating the risky-mortgage frenzy that we are now all suffering from.