How to Handle Those House-Price Declines

During this "Year of Adjustment," it's a buyer's market. But given the homeownership rate is at record-high levels, first-time buyers are getting the better end of the deal, but that's not to say move-up buyers can't do well.

In Seattle, where buyers saw home prices decline 1.3% -- its first posted drop on the Case-Shiller Index since the downturn -- home sellers were still feeling the pressure before the data reflected it.

"I can show you how house values have dropped in the last year and show you with several of my listings that the prices have adjusted to what the true market value is for today's market," says real estate agent Denise Seavitt, with COO Village Homes and Properties, in the Seattle area.

"Buyers are not willing to pay top dollar. Almost all the offers that I have dealt with in the last year have been low. It is a buyers' market," she says. "When sellers sell their home and purchase another, their buying power has increased as well."

She adds, "I believe that prices will continue to adjust during 2008 ... 2007 was the year of the slide and 2008 is the final fallout from the change in market conditions."