I agree with what you wrote, but I have to add there is another group of mortgages to be leery of. Those people who put 20% down and have nice fixed rates but have been informed their homes are now worth less than what they owe on their mortgages. This is happening a lot in the boom areas where people have lost up to 50% the value of their homes since the peek in 2005. If you put down a good down payment and your home has gone down so much that it ate up your down payment and then continued further down to get you upside down on your mortgage, you'd be pretty emotional. You'd have to make the decision do I hold onto this house payment that is costing me more than my house is worth, or do I let it go and rent or buy the same type of house I own for about half the price. As home prices go lower more people will have to make that decison, even people with good credit and good flat rate mortgages. The worst is far from over. I see no signs of recovery yet, if there are signs, tell me what the good news is, please?

Lita, I'd love to believe you that maybe my home will go back up in value in a few years but right now I'm skeptical. How could my house have cost so much in 2005 and be worth so little now? What are the underlying factors causing such a drastic loss? It couldn't just be subprime mortgages, other dynamics must be working against housing. Here in Florida our homeowner's insurance policies skyrocketed yet I never made a claim or had damage. I would like to leave this state but I'm trapped and I fear if I wait a few years my house might be worth even less and I'll have been trapped and still no better off. I'm worried there is something much bigger than subprime behind the devaluing of homes. We have record national debt, borrowing for wars, terrible trade deficits, yet we continue to outsource. Why don't we charge large taxes on imports? I know people who have lost high paying jobs only to find new jobs making a lot less in the service industry. Add to that many people have credit card debts and now no equity. It's cheaper to rent now that we're paying big mortgages, big insurance and increased property taxes. If wages keep going down how could housing justify going up again? Plus, if consumer's are tapped out or in debt who is going to shop to stir the economy? What will cause growth? It won't be all the products we export because they are very few compared to our imports. So what on earth is the plan to pull us out of this slump? In Florida this "slump" feels already like a deep recession. They are cutting our funding to our schools, hospitals, and other community services. Things are really bad in Florida.

AMEN! The housing woes are FAR from over! Be careful or te Wall Street money boys will take you to the cleaner.

We have the National Mortgage Complaint Center & we are convinced the US Residential Real Estate Market will not get kind of worse, in a press release last week we predicted it would lose another 7% to 9% with specific regions like the Southwest, Southeast & Northeast losing up to 15% in 2008. What we can't figure out is where is Wall Street and its 6 to 10 month outlook. (It seems more like a 6 minute outlook). We also have great concern over what all of the real estate train wreck will do to pension funds and some mutual funds, because in many cases they are the places left holding the bag on real estate portfolios only worth $0.75 to $0.80 cents on the dollar.

This mess in the real estate markets is very interesting to watch, especially if you were lucky enough to get out of it about a year ago, which I was. I'd like to find a source for a few facts which would help me make sense of the mess. For example, what percent of the entire US population currently owns their own home? What about by region, state, metro area, etc. In other word, where are there pockets where most people can only rent, and where do people mostly own? With all the home owning speculation that's gone on, isn't there just way too much housing in some areas? I've heard that in areas around Las Vegas there are houses that have traded hands for years - but never been lived in! Also, I find it appalling - and counterproductive to the well-being of the market - that lenders make these absurd 'teaser' rate loans to people who are perhaps only hoping to be able to afford their higher rates later on - but when that time comes, their loan has traded hands a number of times, and the original lender has just washed their hands of the whole affair. I think there should be some accountability, some responsibility on the part of the original lender to try hard to find some way to prevent foreclosure - after all, if the underlying price of the house has dropped, why not issue the new loan based on the current value - the lender eats that difference, but not the whole thing, the owners get to keep their house, everybody is better off. Or, why not put financing out to 40 years - yeah, a whole lot more interest - but much lower payments. Buyer has the option to pay down more principal. Again, buyer keeps the home, bank does not have to foreclose and write off. Better all around. Any comments?

Florida real estate has started to level off and in some areas in south and southwest Florida prices are increasing at a modest rate. You people should look at the facts before you make them up.

Buying and selling homes in SW Florida for 7 years doesn't make me an expert, but I know for a fact the numbers you are tossing around are BS. If you know the market so well than how did you lose so much money? Yeah, your the expert I want to listen to..lol..

Americas watchdog, You got that right it's not just a mortgage problem it's a real estate train wreck. What good is it to have a good mortgage if your house is worth half of what you paid. You see houses just sitting and they cost less than what you paid. Builders giving away all sorts of stuff including cars and you think why am I paying on this overpriced mortgage when I could buy back my house for half the price? This is much bigger than a mortgage problem this is a lost equity problem, lost down payment problem. This is a major financial loss for many of us in the 100's of thousands per house. I guess wallstreet likes the housing "slump", but nobody else does. Something is very wrong either the economy is really in trouble, or people gave unfair housing aprraisals in the first place. Something is very wrong here.

First of all, I thought Lita Epstein had the most well reasoned response. Thanks for that. It is a very complex problem and simple solutions like "tariffs" is a terrible idea for reasons too hard to explain here.

Wall Street does like the the slump. The housing boom was a result of the internet bubble. People didn't want to invest in stocks so they put more money into their homes and second homes. Now that the credit crisis has become old (sorta old) news the stock market is once again breaking records.

People WANT to move to Flordia but Wall Street is predicting further declines so people are too scared. And who wouldn't be with doomsday talk from media and economic predictors that have nothing to do with the health of the market. Housing starts and permits are lagging indicators in this market because builders are just as fearful as investors.

SW Flordia is supposed to be the hardest hit. I know someone that bought a house in SW Florida at the peak of the boom for $350,000 and it just appraised last week for $280,000. Yet someone has offered to buy it this week for $330,000. This is not an isolated incident. It was the result of investors dumping properties in this new community and now that they are all "dumped" the market is returning to normal. The dollar is weak and a big part of the Florida boom was overseas investment. Why isn't that still driving the market? It is becuase of fear. The speculation happened for good reason. the demand was and is still there. Now that housing starts and new construction has stopped there will be a lack of supply in a couple of years and the market will be forced to recover. When it does, it will be another housing boom and everyone will talk about how the country failed to predict actual demand.

Also, the banks are not in as much trouble as it would seem. Banks declare losses in an account called loan loss provision. These are not real losses and banks have over estimated this account (most likley due to regulators). When something so public affects banks regulators downgrade loans and when a loan is downgraded fare enough it is considered a "loss" and will lower earnings. The average life of a motgage is seven years so in about seven years make sure you own bank stock because it will go through the roof when they get all that money back on the books. If you don't trust me, trust Warren Buffet because he is buying stock in companies like Countrywide.

knuckle, I live in SW Florida. Over a year ago when I first listed my house I listed it for 369,000. As time went buy we kept cutting the price until it went down to 250,000. Just 2 weeks ago my realtor informed me I need to lower it to around 200,000 if I wanted to remain competitive. I said, no way now it's lower than what I owe, he said, I should call the bank and see about a short sale, since they are expecting the homes to go down another 15 to 20% in 2008. So how have the prices stabilized? Either my realtor (who is the top seller in our town) is telling me a story or you with your 7 years experience are telling me a story. Either way you look at it my house was worth 400,000 in the 2005 peak and now it should be listed around 200,000. That's half price. That's where I get my figures from. Why you think it's necessary to insult people or say their numbers are BS I can't imagine. But to be stuck in this situatiion is nothing to laugh at, I didn't say I was an expert but my realtor seems to know the market well.

i simply cannot believe that these lenders will take back all of these homes that are no longer valued at the same amount the loan was issued for---it will be like sheep going over the cliff! short sales are an option, but if there is any way that you can hold on to your home-HOLD ON. these lenders are going to have to work with the borrowers whether it be helping them thru a refinance to lower payments, excuse payments and add them back into the principal. the suggestion i have is that you call your lender to see if they have any options available at this time. they see the handwriting on the wall and they see their fellow lenders sinking so something has to give.

Claire, We took our house off the market. I'd heard about foreclosures and shortsales and how prevalent they were becoming, but I never imagined it would happen to me. I had put down a large down payment and have a great low fixed rate. However, to have a house drop to half it's peak value in 2 years doesn't even seem posssible to me. It makes me think something corrupt or something must have happened, either that or this is a very deep recession that just hasn't been officially announced. Either way we've decided to meet with a lawyer and try to sort this out. We don't know what to do maybe a lawyer will know.

Lita, Thank you for the HUD sight. I'll look into it. I think there are some people stuck in bad ARM mortgages that probably can get a better loan, and I hope they do. Our problem is we've been trying to sell our house for over a year because we wanted to move away from Florida. We have a 6 1/2% fixed rate conventional mortgage with no PMI costs. That's a pretty good mortgage in todays market. Our problem is more the lost equity, upside down mortgage problem and no buyers for our house. So I'll check out the sight, but I still think I might need a lawyer. Thanks again for the sight.

The banks are seeing the solution for upside down loan holders to be a longer new mortgage, 40-yr term, which would keep people in their house and have a 10-yr balloon once this cycle is over. They are offering this to people behind in their mortgages. Its a fair remedy.