When others are crying, I'm buying.

England’s Nationwide Building Society recently reported that housing prices “are now falling year-on-year”. The annual growth rate in the value of homes is now a negative 1 percent.

This is causing concerns that “homeowners may be pushed into negative equity, as the amount owed on their mortgage exceeds the price of their home.” Particularly worrying is the 1.4 million home owners on fixed rate arrangements who are due to switch to variable rates this year. They will face significantly higher payments for a home that has declined in value.

A Bank of England official, Danny Blanchflower says that “prices could fall by as much as 30pc in the next two to three years.”

Sounds bad doesn’t it? Well, things are even worse in the U.S. The S&P Case/Shiller Home Price Index follows the twenty largest housing markets in the States and they found housing prices “plummeting by 12.7% in the 12 months ending February. CNN reports: “That’s the biggest fall since the index began tracking prices in 2000.”

The big losers are Las Vegas, down 22.8%; Miami, 21.7%; Phoenix, 20.8%; Los Angeles, 19.4%; San Diego, 19.2%; and Tampa, 17.5%.

This means foreclosures on many families. In just the first quarter of this year 156,000 homes have been repossessed. Foreclosure rates are up by 112% over last year. In California the foreclosure rate was up by 300%.

Hollywood may have brought us the Runaway Bride but Washington has helped create the Walk Away Home Owner. These home owners are faced with rising mortgage costs while their homes decline in value. And many are simply choosing to hand the keys to the bank leaving them with the mess.

Some companies, for a fee, help clients walk away from their homes. They promise the home owner that they can stay, rent free, in their home for X amount of time while the bank struggles to foreclose. During that time they counsel homeowners to make no payments and save the unpaid payments for their own use.

Even individuals who can afford to make their payments are walking away. I read of high wage earners in San Francisco who saw the values of their apartments dropping by 20% to 30%. Even though their salaries easily covered their monthly payments they mailed the keys to the bank and walked away figuring they were only throwing good money after bad.

Some savvy homeowners are holding the banks to ransom. They cease paying on the property entirely. As the bank panics they attempt to renegotiate the loan by devaluing the house. A home that was purchased for $800,000 for instance might be revalued at $500,000 with the bank writing off $300,000.

What is practically perverse is that during the months it takes to arrange foreclosure the home owner may be able to save enough to go right out and purchase another home. Even if he purchased a similar home the price is likely to be significantly lower and banks are so desperate they are willing to overlook the previous foreclosure.

All this means lots of empty houses. About one in every 33 homes is empty and waiting to be sold. Nation-wide 2.8% of all homes are vacant. This is the highest quarterly vacancy rate on record for more than half a century.

I would be surprised if housing values begin to recover sooner than two years from now. If I had to make a projection it would be that housing values will continue to drop. For the next year or two there will be many bargains to be had by those who have saved and are prepared to purchase. The banks are holding lots of homes that they are going to have to off load at significant losses to themselves. And that means prepared buyers can win big time.

As for homeowners the situation varies from person to person. Certainly individuals who are well into paying off their home are unlikely to give the house back to the bank. More recent home buyers may find they are paying for something that is declining in value and many of them will gain if they give the house back.

Investors in housing are facing difficult choices. If they wanted a quick turnover at a nice profit they are going to be disappointed. If they sell now they may well be facing a significant loss. They may prefer to rent out the property either at cost, or a slight lose, and just wait for the slump to end. Investors, or others, who are in the position to buy over the next year will be sitting pretty. The investment strategy of "When other's are crying, I'm buying" could earn them a hefty return in years to come.

For years property owners have been sitting pretty watching equity rise. Those trying to get into the property market were the ones having a hard time. Now things have turned around and it’s a buyer’s market.