Existing home sales continued their downward spiral for the eighth consecutive month in October, the AP reported today based on a report from the National Association of Realtors. The 5.1% drop in the median price of a home sold compared to the same time a year ago is the biggest year-over-year price decline on record, according to the AP.

Of course, analysts blame this housing slump on the serious credit crunch, but we all know the housing bubble that burst has a lot to do with it too. Housing was in a bubble and as with all bubbles, prices went up much further than they realistically should have in many areas of the country. People who bought homes at the peak of the bubble are the hardest hit right now because their mortgages probably already are upside down (they owe more than the home is worth) if they bought in one of the hard-hit areas -- California, Florida, Michigan and Nevada. Analysts don't think this housing price drop is over. I've seen predictions of a drop of 10% to 30% in the next five years in some areas of the country. The hardest-hit areas already have seen a 30% drop or worse.

While I keep hearing people talk about subprime borrowers who default on their loans as idiots who should never have bought a home in the first place because they couldn't afford the payments, the reality of the situation is that everyone is being hurt by the subprime mortgage mess, and even prime mortgages are now seeing strain. If something isn't done to make it possible for people to save their homes from foreclosure, prices will only drop even more dramatically as more and more foreclosure homes are sold are fire-sale prices.