To put that into numbers that we can relate to, consider that the average home sold during the fourth quarter of 2007 was $217,900. Now let's compare that with the average price of homes sold in 2008, which fell all the way down to $180,100. We are talking about a $37,800 difference.

For the full year 2008, the drop was not that hefty, but still a lot, with a 9.5% drop for the entire year. On average, homes sold in 2008 fetched $197,100, compared to $217,900 in 2007.

While home prices have been dropping, sales volume has been inching higher in some places in the country that have been hardest hit by the real estate collapse such as California and Nevada. The reason is that people are stepping in and buying foreclosures and distressed properties.

While it is never good news to hear that home values are down, this is probably the best thing for the real estate market at this time. With the large inventories of unsold properties and foreclosures on the market, the industry is not going to be able to start to rebound until these properties get sold, and the lower the price, the easier it will be to find someone willing to step in and take ownership of these properties.

Consider that January was the tenth straight month in a row where foreclosures exceeded 250,000. Someone has to eventually buy these properties, and the buyers that do step in are going to get a lot of house, for a lot less than they would have a couple years ago. But the point is, that someone has to buy these and get them off the market.

Another thing that is keeping the home values low is the fact that the credit market is still not flowing as well as it should be. In many cases, banks are still not that willing to set up loans for the big dollar houses. Most of the transactions are still in the mid to low range properties, and that is where most of the home sales are coming.

For those that are able to get their hands on financing, they are enjoying near all time low mortgage rates. The average 30-year fixed rate mortgage this week is down to 5.16%, from 5.25% last week. While this is still higher than the record low 4.96% set back in January, it is still very low, and very favorable.

Many of the homes that are trading hands are going to first time home buyers who are taking advantage of the falling prices and getting into properties that they just could not have afforded a few years ago. This is a good thing too.

So while home prices are falling, there is a positive side to it, and unless you plan to sell your home in the next year or so, be glad prices around you are dropping and that the foreclosures in your neighborhood are getting bought up. After all, until they are all bought, there is no way that your home will start to go back up in value!