I woke up this morning to Today's leading business Headlines , ( Real Estate News)

can ‘eye-catching' news like ....

"New home sales plunge to lowest level in 16 1/2 years, prices drop by largest amount in 38 years"

according to the Commerce Department , "The median price of a new home in March, compared with a year ago, fell by the largest amount in nearly four decades."

.... ever be considered optimistic for housing.

don't get me wrong this is not great news for Real Estate.

In fact, here in Greater Phoenix and its familiar towns of Scottsdale, Paradise Valley, Fountain Hills, Tempe and Mesa, we are hit more than most.

However, can these numbers ever be interpreted to be good news?

One of the major problems facing the ailing real estate market is the difficulty for buyer's to obtain loans. Due to the sub-prime debacle, lenders have taken major losses, and in many many cases are out of business. Lenders are afraid to loan even to the most qualified of buyers.

However, I strongly believe, amidst all the negative news surrounding Real Estate, there is something significant being overlooked; and that is the reduced risk to lenders to loan on lower valued houses.

Let me give you an example.

let's say that in 2001 a home priced at $200K would obtain and 80% loan for $160K.

However that same house in 2005 was $400K, this an 80% loan of $320K; a loan 60% higher on the exact same home 4 years earlier. Thus, much less security.

As home prices drop, lenders can more comfortably step into the market providing loans on the same houses. Simply put, lower prices, mean less far to drop (let's face it, we are not going to zero) and higher prices have more room to go down.

This as a simplified example, though, lenders are in the business of loaning money. That's what banks do for profit. They are eager to do this if prices (security in terms of equity in the home) are at more reasonable and safer levels.