As foreclosures continue to mount, prices keep going lower and lower, and we are now looking at homes at their lowest prices since all the way back to 2003.

According to David Blitzer, who is the chairman of S&P's index committee, the declines are pretty universal across the entire nation. He notes that all 20 of the major metro areas that the index tracks were down year over year, and 8 of the 20 were down in excess of 20%.

It has definitely been a tough couple of years for homeowners, especially those who have only recently bought their homes. As of December homes were, on average, 27% lower than they were in the housing peak of mid 2006, creating some serious headaches for homeowners who have seen their mortgages go under water.

The areas hardest hit in December were the usual suspects: Values in Phoenix dropped by 5.1%, while homes in Las Vegas lost another 4.8%. On a year-over-year basis, Phoenix homes dropped by a numbing 33%, with Las Vegas a bit worse with a 34% annual drop. San Francisco is another market that has seen its fair share of hard times, with properties dropping by an annual rate of 31%. To put it a bit more into perspective, homes in Phoenix are now an amazing 46% lower than they were in June 2006. Definitely not a pretty picture.

Looking hard for some positive news, we can mention that Denver and Dallas did "OK," posting just 4% and 4.3% annual declines respectively. Compared with the rest of the major metropolitan areas, this is seen as a big victory for those cities.

As we already mentioned, one of the major contributors to the drop in prices has been the sharp rise in foreclosures that have left banks forced to sell homes at rock bottom prices. Last year, foreclosures jumped by an incredible 81%.

The total number of homes that were foreclosed on reached 2.3 million, and despite efforts by the government and some banks, those numbers are expected to continue to rise this year. Last month, we saw that we were still not out of the woods as January foreclosures were 18% higher than the same period in 2008.

As President Obama looks for all possible ways to get the overall economy back on its feet, the housing fiasco has to be weighing heavily on his mind. Falling home values lead to eroding consumer confidence, and eroding consumer confidence keeps people from running out and spending money, something that must happen before the overall economy is able to break out of the current recession that has been gripping the country, and the world.

One result of this price drop is that in many areas of the country people have started to move back into the market to buy up the heavily reduced or foreclosed properties. This is the first step in the rebound, and a necessary one, but for the meantime, and the foreseeable future, this is going to continue to lead to lower home values and unfortunately continue to nip away at an already fragile consumer confidence.

What are home prices doing in your area? Have you noticed values shrinking, staying the same, or possibly even inching higher? And let us know if you would consider buying a new home at these new lower prices, or if you still prefer to wait on the sidelines and see just how low the homes will go before looking to snatch up some discount?