01/20/2012 04:09 pm ET Updated Jan 21, 2012

Home Prices Plunging More In Battleground States Than Nationally

Newt Gingrich's alleged request for an open marriage and Mitt Romney's tax returns took center stage at last night's Republican debate, but perhaps the candidates should have been focusing on a different issue if they want to win.

In 15 out of 16 states that are battleground areas for the election, home values have fallen an average of 16 percent since October 2008, according to a report from the Progressive Policy Institute. That's compared to an average drop of 11.8 percent for American homeowners overall between 2007 and 2009.

And if candidates don't come up with an adequate plan to address the housing crisis, they could be facing voters' wrath. Romney was already assailed by critics in December for comments he made in an interview with the Las Vegas Review-Journal suggesting that the foreclosure process should be allowed to run its course.

"No doubt, every contender for the White House will have a jobs plan," the the authors wrote in the PPI report. "But no economic plan can be complete without an equally robust plan to rebuild housing -- and in particular, to rebuild housing wealth."

Nearly four years after the housing crash helped to pave the way for a financial crisis, home prices may still have yet to bottom out. Home prices fell 2.5 percent in December from a year ago, according to the National Association of Realtors. But the news isn't all bad. The supply of U.S. homes on the market plunged to a level not seen since 2005.

That could be because the glut of foreclosures on the market may be starting to finally clear. Foreclosure filings dropped dramatically last year, according to RealtyTrac. Though the drop points to recovery, it doesn't provide much solace for homeowners that are still struggling.

Nearly 12 million Americans are underwater -- or living in homes that are worth less than they owe on their mortgages, according to the PPI report. In the 16 battleground states the report focused on, median home prices plunged from an average of $167,231 in October 2008 to $27,913 in November 2011.

In Nevada, an important state for the election and the one of the hardest hit by the foreclosure crisis, 91 percent of homes saw their values drop in the last year. In Arizona, 72 percent of homes dropped in value last year.

The report offered some housing crisis fixes for the candidates to consider adopting. In one approach called "shared appreciation mortgages," lenders would allow borrowers to lower their balance on their mortgage loan in exchange for a share of any future appreciation if the owner sells the house. In another proposal, Congress would create a separate account within a 401(k) that would help first-time home buyers save for a house.