http://news.yahoo.com/s/ap/20080226/ap_on_bi_ge/home_prices;_ylt=AuboER25i9_MynoqFqv_R3ys0NUE 

In this recent article, the value of houses across the nation has dropped significantly, especially in the last quarter of 2007 when compared to previous years. Banks are repossessing the homes at an alarming rate, and pretty soon there may be a need for increased helped from the government. The reality is that unlike previous years, if you are currently looking to sell your home, there is a chance that you will not make a desired payoff.

This report can be tied with some of the material studied in class, such as the chapter on matching markets. Last year, for example, a majority of the transactions of houses involved an ascending (English) auction, where buyers would be competing for a house by increasing their bid. Unfortunately for some current homeowners, selling their house has become quite the opposite from the past. The situation can be represented with a bipartite graph. After organizing the information, we see that there are constricted sets and thus no perfect matching. In order for market clearing prices, a house must be priced at a lower cost, rather than higher that what the owner originally bought it for. This example of a descending (Dutch) auction may force sellers to have a negative payoff, depending how desperate they are to sell. A second possibility is that a seller, given his or her reservation price, may choose to wait for the housing market to get better before selling.

Mortgages are now only available for those with qualified credit, after more and more foreclosures occurred nationwide. This decline in the housing market has economists worried of an economic recession, even though the government has already passed an important bill of over 160 billion to help homeowners and their loans.